Financing vs. Leasing

 

What's the difference between financing and leasing a vehicle at White Rock VW? Simply put, the answer boils down to vehicle use and type of ownership. Let's first explore what leasing and financing are. 

 

Leasing a Car

When you lease, you are borrowing a car for a set period of time at an established monthly fee. Leases typically last about three years and include manufacturer warranties that protect you against unforeseen repair costs. This means that you still need to maintain the car -- oil changes, tire rotations, and manufacturer recommended maintenance. When the lease ends, you return the vehicle to White Rock VW for inspection. At this point, you may either return the car, which resolves any costs incurred from wear and tear or excessive mileage, or you may purchase the vehicle. Failure to properly maintain the vehicle can result in fees after the inspection, but otherwise, when a lease is finished you can simply drop it off and walk away.

 

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Advantages of Leasing a Car

Leasing a car can give you lower monthly payments while still giving you access to a brand new car every two to four years. You also don’t have to worry about depreciation as the car loses value. . That means that you're getting a newer car for less money each month without worrying about the resell value years later. There is also a much lower barrier to entry for car leases. In many instances, a car lease can require a down payment anywhere from $0 to several thousand dollars up front.

 

Another advantage of leasing a car is that, in many instances, leasing companies are willing to work with you to come to a reasonable deal. This can be helpful in repairing a bad credit score and is a new source of credit, which can improve your credit history. Cars for business, especially when the businesses plans on using it for work purposes only, are perfect to lease. You may even receive a tax deduction for doing so.

 

Financing a Car

Financing a car is very different than leasing a car. When you finance, or take a loan for the car, you pay a lender a pre-set amount for a finite period of time. Until the end of that period, or until the loan is repaid in full, the vehicle belongs to the lender. As you make loan payments, you gain equity in the vehicle. With financing you are taking a loan on the total value of the car, where as leasing is more akin to renting the vehicle. This is why financing generally comes with higher monthly rates. On the other hand, you have the option to pay the loan off quicker than the agreed on time, and there is the intrinsic pride that comes with ownership. Vehicle financing can also be more cost effective in the long run for a car buyer.

 

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Advantages of Financing a Car

Financing a car has many strong advantages. With financing, you can build equity by paying back your car loan, and you can enjoy the satisfaction of owning your own car. Financing also has greater barriers to entry than seeking a lease for a vehicle, though it may be more rewarding for the buyer. It can be difficult to be approved for a car lease with bad credit, but in many instances a dealership will still approve bad credit car loans, though possibly at a higher interest rate. Financing can enable you to buy a better car than you may be able to afford, and it also prevents you from having to shell out extra cash for repairs after buying an older vehicle. Sometimes older models have unexpectedly costly repairs, which can significantly raise the price of the vehicle. Beyond that, financing opens up the option to buy a vehicle that has modern amenities and safety features.

 

Another advantage of financing is that it allows you to be able to spread out and manage the otherwise hefty cost of a new car. Spreading out the cost can make it easier to eventually pay off the car. Having the cost spread out also makes it easy to tell exactly where you stand with your monthly payments. Financing through a dealership has its own benefits too. In many cases there are several perks that come with doing so, including low initial interest rates or even zero percent financing for the first year.

 

Should I Lease or Finance My Car?

This is completely up to you! Our Financial Services experts are available to help you find an option that best suits your preferences, budget, and lifestyle, but there a few important points to consider:

 

-Is having a newer vehicle every two to four years with warranty coverage more important than the long-term costs associated with leasing?

-Are long-term costs savings more important than the monthly investment in a lease?

-Is vehicle ownership more important than the short-term savings?

 

In essence, if you want to own your vehicle, save in the long run, and are not concerned with upgrading every two to four years, then financing may be for you. However, if you DO want access to newer cars frequently, you want to save money on the monthly investment, and are not concerned with owning the vehicle then leasing may be a better option for you. We would be happy to discuss both options.

 

Contact us today!

Our financial experts are ready to help you make this decision. For an estimate of monthly payments check out our car loan calculator, and contact us today to get started!

 

 

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