Auto Lease vs. Purchase
Deciding whether to lease or purchase is a complicated question and one that can drive you a little crazy if you let it. You are the only one that can decide on which option suits you best. In this article, we will take a look at a few of the important questions you need to answer before making this important decision.
Lease or Purchase?
Question: Do you want to drive a new car every two to four years without major repair cost?
Answer: Lease
Question: Do you want a long term cost savings?
Answer: Purchase
Question: Do you want lower monthly payments and a smaller down payment?
Answer: Lease
Question: Do you want to pay off your vehicle and be debt free for a while?
Answer: Purchase
As you can see, your lifestyle and personal factors weigh heavily in this decision. How you decide the lease vs. purchase question depends entirely upon what your ultimate goals are both for your lifestyle and your pocketbook!
Auto Lease Financing and Car Purchase Loans Points to Ponder
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 decide to purchase your car, then your monthly payments are not only going towards interest and depreciation, but you are gaining equity as well. Keep in mind that once you have paid off your car loans, you are able to sell your car and regain your equity. By contrast, once your lease is over, you hand the car back to the dealer, walk away and get nothing. It is no wonder that people get confused by the lease vs. purchase question! However, as you have seen here in this article, if you think through the basics, the right option for you will materialize.
Check out other articles at Car Loans Canada to learn more about auto lease financing and car purchase loans including bad credit car loans. Apply online for financing today!
