If you want a car but do not have the money to buy one upfront, you have two choices. You may lease a vehicle, or you may choose car financing. Here are some of the key differences between leasing a vehicle and car financing that may help you decide which option is better for you:
With car financing, you maintain ownership of the vehicle once you have settled your loan. Usually, car financing terms last for about 4 to 6.5 years. On the other hand, a lease agreement normally last for 2 or 3 years. After this time, you must return the vehicle, no matter how much you pay during the period. If you want to keep the vehicle after the end of your lease, you will have to make arrangements to buy it.
When you finance a vehicle, you will be required to repay the lender for the entire price of the vehicle, plus interest, taxes, other charges and fees. With a lease agreement, you are paying for the depreciation of the vehicle for the duration of your lease, with added interest, taxes and fees. That is why, in most cases, monthly payments with a car loan are higher than monthly payments for a lease.
If you wish to sell your vehicle before you have cleared your car loan, you may do so and use the money you get from the sale to put towards paying off your loan. With a lease, your best option is to stick with it. If you do not, you may end up having to pay extremely high fees for terminating your lease before the end date.
A lease agreement comes with restrictions on how much mileage you can put on the vehicle for each year of the lease. Surpassing the mileage limits will result in penalties. You will also be charged fees if the vehicle has excessive wear and tear.
With car financing, there are no mileage restrictions. You can use the vehicle as much, or as little as you want. There are also no charges for excessive wear and tear. These things may, however, lower the value of your vehicle if you ever decide to sell it.
Is car financing a better option for you?
If you want to purchase a vehicle with the help of car financing, Instant Auto Loans is an automotive financial institution that will offer you an instant car loan based on the equity in your old vehicle. Established in 1986, we have over thirty years experience helping drivers to afford the cars they want. We also have rates that are among the best in the short-term lending industry.
When you do business with us, we guarantee courteous, confidential service and a simple loan application and approval process. First, apply online and be approved in seconds. Then, collect cash right away to purchase your vehicle. After you have completed this process, keep driving the vehicle while making your monthly payments.