Because people have different opinions, asking them about leasing versus buying a car could cause unnecessary confusion. If you’re considering either option, learning the facts is important. With this information, you’ll have a much easier time deciding between the two options.
Buying a New Vehicle
To purchase a new car, you’ll need to secure a loan. For that, you can work with a bank or credit union. Another option involves taking advantage of dealership financing. Regardless, you’ll pay a certain amount each month, which includes interest. However, for some people, that creates a problem.
If you have less than perfect credit, you’ll pay a higher interest rate than someone with excellent credit. Also, based on your FICO score, you might have difficulty finding someone to loan the money. Because of these challenges, try to increase your credit score before you shop for a new automobile.
You’ll make the monthly payments until you’ve paid back the entire loan. At that point, the lender signs the title over to you. One advantage of buying is that you can keep the car, trade it in, or sell it without a lien. A disadvantage is that you’re responsible for the cost of maintenance and repairs.
The problem is that the value of cars depreciates quickly. For example, say you initially paid $30,000 for a new car. Now six to eight years later, you couldn’t sell it for anywhere near that price. Instead, you’d need to ask for fair market value.
On a positive note, you can do whatever you want to your vehicle after paying off the loan. Because it’s yours, you can paint it, tint the windows, switch out the wheels, etc.
Leasing a New Vehicle
You’ll need good credit to lease a vehicle as you would when buying one. Even so, some dealerships have special programs for individuals with lower than preferred credit. So, if you don’t have a high FICO score, don’t automatically assume you won’t qualify to lease.
While you won’t make monthly payments to a lender, you will pay a monthly fee to lease a car. The payments are less, and you won’t need to put as much money down. However, it’s typically much lower compared to buying. For that reason, this may be a more economical choice for you.
Here’s another benefit of leasing an automobile. The dealership will set the term, which usually runs between 24 and 36 months. At the end of that period, you can turn the car in for another one. That means leasing always allows you to drive a new or newer vehicle. You also don’t have to worry about haggling on price as you would when selling a car.
One other thing to consider, as part of a lease, you’re not responsible for repairs. However, you do need to abide by the contract. That could limit the number of miles you drive and prevent you from modifying the car in any way.
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Make an Informed Decision
Before making a quick decision, weigh the pros and cons of buying versus leasing a car. Also, the experts at Barbour-Hendrick Honda Greenville in Greenville, North Carolina, can review your options in more detail. Give them a call today.
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