The primary confusion that occurs when consumers decide to get a car is choosing between financing or leasing a car. Some people may state that financing a car is better, which is true if you look at it from a financial perspective. However, for you to go ahead with financing a car, you need to be sure that you can make the significantly higher monthly payment, loan and continue using the same car for awhile.
On the other hand, many people support leasing as a better option as it is a cheaper option on a monthly basis. Also, it is an ideal option for someone who likes to change things up and try a new car after a while.
However, when making a final decision, there is no single answer that can be proven definite. In the car finance vs. car lease debate, each has its own set of advantages and disadvantages. Here are the most common pros and cons of financing and leasing a car to help you decide the best way to meet your requirements:
1. Pros of leasing
The pros of leasing a car can include the following benefits:
- You have to make low payments as monthly installments, along with minimal or no down payment
- You can have access to newer cars by paying less money as compared to financing
- You do not have to pay high repair costs as a lease is generally covered with a manufacturer’s warranty
- Switching to a new car in two to three years is much easier
- You do not have to go through hassles with selling the car or trade-ins
- You pay much less sales tax
2. Cons of leasing
The cons of leasing a car includes the following hindrances:
- You have to return the car at the end of the lease
- You will usually have a mileage restriction for a single year
- Lease contracts are confusing as they have unfamiliar terminology
- Comparing finance vs. car lease, you are likely to pay more in the long term by opting to lease a car
- You could have to pay charges for wear and tear on the car at the end of the lease
- Terminating a lease early requires you to pay a hefty charge
- You pay more for exceeding the number of miles specified
3. Pros of financing
The pros of financing a car includes the following advantages:
- You have the freedom of modifying your car as you please since you own it
- You will have much larger savings in the long term
- You do not have to abide by any mileage restrictions
- You have a greater degree of flexibility of ownership as you can sell the car as and when you want
- You can trade-in your car to buy a new one for a lower price
4. Cons of financing
The cons of financing a car can include the following disadvantages:
- You need to pay a large sum of money as a down payment
- You have to pay higher monthly installments to repay an auto loan
- You have to pay for any repairs or maintenance after the warranty ends