car buying process may seem daunting and tiring, but it certainly does
not have to be. Even if you aren't sure about what exact vehicle you'd
like to drive home or what any of those funny finance acronyms mean, it
can help make purchasing a car a little easier if you are even just
briefly aware of a few things. To begin, understanding the difference
between leasing and financing can help guide you in the direction of what
vehicle is right for you. It can also help you to feel more informed and
comfortable when making a decision regarding your next vehicle.
What is LEASING?
be defined as paying for a portion of the vehicle's cost as you use it.
Although it may sound like renting, it is actually very different.
Leasing involves paying the depreciation cost,
which is the difference between the sale cost and the estimated resale
value of your car. For example, the car you are interested in might cost
$30,000 and it is predicted to have a $20,000 resale value in 2 years,
therefore you would be paying for that $10,000 difference. Along with
the depreciation cost are other fees including, but not limited to,
sales tax. Leasing can involve paying a first months payment upfront (if
applicable), a possible security deposit and also a money factor,
which is similar to an interest rate. A money factor is a rate
determined at time of purchase (could be .001 or .004) which is also a
cost you must pay monthly while using your car. Rates fluctuate, but
whatever the rate is at the beginning of your lease is what you will pay
throughout your lease, regardless of what the rate changes to.
What should I consider when leasing?
in mind when considering a leasing option that you should know about
how many miles you will be driving. Leasing charges cover a certain
number of miles while you are driving the vehicle and you may need to
pay extra $$ if you go over the number of miles that is stated in the
lease. Also, understand how much you would like to spend per month on
"using" your vehicle and ask yourself if you'd rather pay low monthly
costs and no down payment rather than a higher cost up front. In
addition, when your lease expires you have the option to either return
the car OR purchase it for its depreciated resale value.
car is defined as paying for the entire cost of the vehicle in addition
to finance charges and sales tax. Many would agree that buying a
vehicle is more straightforward then leasing. When purchasing, there is
absolutely no restriction on how many miles you can drive.
What should I consider when financing?
making the decision to finance your vehicle, remember that you might
need to make a down payment. You also will be paying interest rates
along with any loans taken out to pay for your vehicle. That interest
rate is determined by your loan company and based on your credit
So what should I do? Lease or Financing?
a good option if you want low monthly payments, would like a new car
with the latest features, including safety, every 2 to 3 years, want to
be driving a new car that is always under warranty, understand that you
will need to either return the car or pay the resale value at the end of
your lease and know about how many miles you drive on a monthly basis.
be better for you if you would prefer to own your vehicle, understand
that you may have higher monthly payments at first, want to customize a
car further, want to be "payment free" down the road, feel confident you
can maintain the cost of repair after the warranty expires, drive more
than the average amount of miles per year and prefer to drive a car for a
long time to spread out expenses and costs.
course we understand that you may have more questions regarding the
leasing and buying processes. Our goal is to make sure you are
completely informed about all options. We are here to make it more
understandable and easy for you.
OR just TWEET your question to @RockinghamSalem!