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Dealership hours of operation
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Dealership hours of operation
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My Garage

Is it better to lease or finance a vehicle?

Is it better to lease or finance a vehicle?

Financing a car means a customer purchases a vehicle by taking out a loan with a bank or another lender. This loan is extended over a set time frame and requires monthly payments which cover both principal (what they owe for the vehicle) and interest. 

 

When leasing a car, you’re borrowing the vehicle for a set period and making monthly payments to use the vehicle over the duration of your lease. In exchange for making the monthly payments (plus extra fees), you’re getting the car to use for as long as your lease agreement is valid – typically, two or three years. 

 

Additionally, monthly leasing payments are typically lower than the monthly payments on financing if you bought the same car. Read on if you’re wondering, should I finance or lease?

 

What Is a Lease?

What Is a Lease

 

A lease lets you drive a vehicle for a fixed amount of time, often two to three years, making monthly payments until your lease is up. With leasing, you get the chance to drive a new vehicle every few years, which can be essential if you’re driving for business or meeting clients. Once you’ve finished the lease, you can always trade the car and begin another lease with a new vehicle.

 

What Does Financing a Vehicle Entail?

What Does Financing a Vehicle Entail

 

Unlike a lease, financing gives you ownership of the new or used car. You can sell, trade, or refinance anytime.

 

Is Leasing or Financing Better?

 

If you’re trying to control your monthly expenses, then leasing a vehicle typically offers the benefit of lower payments than buying the exact vehicle. So, if you’re okay with having one car payment each month, like trying different models and value, not having long-term maintenance and resale, then leasing might be the way to go. Moreover, if you live on a fixed income and want a predictable, affordable car payment, then leasing might be a good fit.

 

Conclusion

Conclusion

 

Yes, you could take out a longer-term lease, but doing so could wipe out the financial benefits of renting rather than buying your vehicle. With leasing, you don’t need to make a sizeable down payment, nor do you need to worry about the costs of potential repairs, as the vehicle will come with comprehensive warranty coverage.

 

Monthly lease payments are usually lower than auto loan payments since they’re based on a car's depreciation over time rather than its purchase price. Lease payments generally include an amount that a vehicle is expected to depreciate over your lease, plus monthly sales taxes and financing fees. Choosing between leasing and financing depends on how you want to control your monthly payments. So, in the end, it’s up to your preference and lifestyle. So choose wisely.

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