Auto Lease vs Purchase

The question of auto lease vs purchase can only be answered on an individual basis. It depends on what your priorities are when it comes to your car purchase. Loans and leases each have there positive and negative points. Here are a few questions to ask yourself:

• Do you want to drive a new car every two to four years without major repair costs? (lease)
• Do you want long term cost savings? (purchase)
• Do you want lower monthly payments and a smaller down payment? (lease)
• Do you want to pay off your vehicle and be debt free for awhile. (purchase)

Auto Lease Financing and Car Purchase Loans

There are some fundamental differences in the auto lease versus purchase. When it comes to auto lease financing you are paying for the depreciation of the vehicle during the term of the lease. When you are buying the car you are paying for the price of the car itself. For example, lets say you are interested in a $30 000 car that will depreciate by $10 000 over a lease period of 3 years. If you were leasing rather than purchasing, you would be paying for $10, 000 in depreciation as opposed to the $30, 000 price tag. This is why the monthly payments on auto lease financing are lower than those on car purchase loans. The lease payments also include financing charges. You are paying interest on the money that the lease company has tied up in the car during your lease period.

If you purchase a car your monthly payments are not only going towards interest and depreciation but you are gaining equity as well. Once you pay off your car purchase loans you are able to sell your car and regain your equity. After your lease is up you hand your car back to the dealer and get nothing in return.

Check out other articles at Car Loans Canada to learn more about auto lease financing and car purchase loans including bad credit car loans. Then apply online for financing today!