Financing Cars Vs Leasing Cars
2020-07-13
In this economy, a vast number of people can’t afford the luxury of buying a car. Even those that can afford to are looking to make a smaller commitment. Some businesses have seen that people need more options when it comes to getting a car, especially those that have been blacklisted or are under debt review. There are 2 alternatives to buying a car upfront, which are leasing a car and financing a car.
A car is an expensive asset to have but an asset, nevertheless. This is why people often look to finance a car. By financing a car, you have assistance in paying for the car over time while you use it, so that by the end of a specified timeframe you will have fully paid for the car and own it completely. Generally, this option is only available to those who have a good credit history because there will be a credit check and the financial institution will only help you if you are considered low risk. Something else to take note of is that you are responsible for maintaining the car and getting insurance for it. There’s also a good chance you’ll have to make a balloon payment. These additional costs are up to you to pay for but in the end, you’ll have full ownership of your car.
The option that is rising in popularity is the leasing of a car. How is it different from financing a car? When you agree to lease a car, you are agreeing to only use the car for a certain period of time before returning it. Instead of paying for the value of the car, you are actually paying for the amount it depreciates in value while you have it. This makes it cheaper than financing but there are more limitations. You do not own the car and you will have a limited number of kilometers that you can travel before you start paying a per/km rate. Leased cars will come with a warranty (sometimes this includes insurance) and you’ll just have to take it for maintenance. However, when the lease period is over, you do not have to buy the car or make a balloon payment, nor do you have to worry about selling the car. Those that are blacklisted/under debt review will have an easy time getting a lease for a car.
Financing and leasing have become the preferable options when it comes to buying cars. Both options offer to ease financial strain but have different conditions upon the end of their contract. You have to decide whether you want to own the car or if you want the low commitment of being able to return it when the lease has expired.
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