When purchasing a new car, you have to take all your options into consideration. Depending on what you plan on using your car for and what terms you prefer, you may have a different preference when it comes to deciding to finance or lease. Here are some of the differences to help you make a more informed decision.
Financing
If you decide to finance a vehicle, it means that you would need to borrow money in order to purchase the car. You would pay regular payments to your credit union, bank, lender, or other financial institution.
With financing, you own the vehicle. If you are not able to keep up with the regular payments, the lender will repossess the car so they can sell it and recoup what they were not able to collect from you.
Otherwise, if you keep up with the payments when the loan is over, you own the vehicle “free and clear” and can continue driving it, resell it, or give it away. By owning the vehicle, it gives you the flexibility to do what you would like with it. However, because you own the vehicle, you are also responsible for selling it if this is the route you choose.
Leasing
On the other hand, leasing a vehicle means that you are borrowing the vehicle and pay regular payments to the company lending it to you.
With a lease, it means that the dealership owns the car. If you cannot make payments, the dealership will repossess the car to try and recoup what they couldn’t collect from you.
At the end of the loan period, the dealership will plan on reselling it unless you decide to purchase it from them at the end of your lease. If you choose to lease, it allows you to pay a monthly fee to drive a nice new vehicle One thing to consider is that when leasing a car, you have to take more precautions since the vehicle is not technically yours. Depending on the terms, you may have to be mindful of the number of miles you put on your car, any scratches, dents, or other wear and tear on your car. If you go over on mileage or the dealership has to repair anything, they may charge you extra at the end of the lease.
Which Is Right For You?
It depends on what you are looking for based on how you plan on driving the car and what you plan to do with the car at the end of the loan or lease period. If you want to own your vehicle and not worry about the shape you need to return it in at the end of the loan or lease, then financing might be the best option. If you want to always drive the latest vehicle, and you don’t mind paying extra if the dealership doesn’t feel that the vehicle is pristine, then leasing might be the way to go.
Do you need help deciding which option is best for you? Let us know!
Let Camino help you. We want our members to find the best option that works for their needs. We offer competitive auto loan rates. Please give us a call at 800-835-3400 to speak with one of our Member Advisors, or contact us for more information.