The Difference Between Leasing and Financing a Car
When one has finally come to the conclusion that they absolutely need to have a Porsche to drive around Chicago, they need to go ahead and decide how they are going to financially maintain the vehicle.
When it comes to getting access to a car there are two main methods that can be taken. Drivers can either choose to lease or finance their new car. The two options vary significantly and which one is better for a person really depends on their current situation.There is much debate on which method is ultimately more economical, but at the end of the day one’s unique lifestyle and circumstances will truly determine which method is best for them.
First, let’s look at leasing a car. Leasing a vehicle is basically when a driver rents out a vehicle for an agreed amount of time. Leasing does not amount to a driver paying off their car but each payment simply goes as rent for using the car. Leasing is advantageous for those individuals who do not have a lot of savings and also for those who are unable to put a lot of money down on the table for a down payment.
Leasing is generally cheaper than financing a vehicle, as smaller payments have to be made on a monthly basis. Furthermore, the down payment rules are not as strict as they are for financing a car. Many drivers are often able to waive the down payment amount entirely when leasing.
Financing or buying a car does require monthly payments as well but these payments are going towards paying off the vehicle. When financing a vehicle, individuals pay interest along with the monthly amount so it can be heavier on the pocket. Financing also requires the giving of a significant down payment and therefore, only those individuals who have saved enough can go forward with this method of owning a vehicle.
Whether one chooses to lease or finance their vehicle truly depends on how they are currently living their life at the moment. If individuals are penny-pinching and every spare dollar counts, then leasing is definitely a better option. When drivers lease a car they get the liberty of saving a little extra cash every month.
However, if a person is determined to own a car fully but they haven’t been able to save up the total amount then they should consider financing their vehicle. Saving up for a down payment is a lot easier — and quicker — than saving up for the full price of the car.
Financing or leasing a vehicle are both good ways to legally own a vehicle and have it on hand for driving around town.