Platte City-Airport Chrysler lays out the difference between leasing and financing
If, like most people, you don’t have the cash to buy a new or pre-owned car, truck or SUV upfront, you’re left with two options: lease or finance. Though both approaches to car ownership will require a monthly payment, each are very different and have their pros and cons.
Read on to learn more about your leasing and financing options to help you decide what’s best for you.
Leasing a Car
Think of leasing a car like a long-term rental agreement. Your payments are going towards the use of the car whose ownership is retained by the dealership (or through a bank or leasing firm).
Leases are a great option for people who like to drive a new car all the time and who don’t want to have to worry about maintenance issues, since leased cars are generally under full-warranty which includes repairs and service. Leases can also be good options for small business or the self-employed, since you can earn tax deductions for a leased car that is used for business purposes 50% of the time or more.
Generally, leases have lower monthly payments and a lower required down payment compared to financed cars, so they can be a good option for the cash-strapped crowd who still need a reliable automobile.
Lease agreements are not necessarily a good choice for people who frequently drive long distances, since most lease agreements have a limit of 10,000 to 15,000 miles a year. Breaking these mileage limits can result in high fines. Leasing may also not be a good choice for those who are rough on their vehicle as lease agreements account for normal wear and tear, but excessive damage to the interior or exterior of the car is the financial responsibility of the lessee.
At the end of your lease agreement, you return the car to the dealership; you don’t need to worry about reselling it yourself. Of course, one downfall of a leased car is that you don’t have any equity at the end of the transaction.
Financing a Car
Financing a car provides you an affordable path to car ownership. So if you’re looking for a car or truck to hit high-mileage markers with, this could be the path for you. There are a wide variety of financing options from both dealerships and banks, but what you’ll qualify for greatly depends on your credit score and what kind of down payment you’re able to cover. To finance a car, you’ll need at least 10 to 20% down. Generally, a shorter-term lease of 36 or 48 months will cost you much less than a longer five or six-year loan.
When you finance a car, your creditor owns the title of the car, which means that if you want to sell the car before paying it off, it can be a little trickier than an outright private-party sell. The good and bad news is that you own the car, for better or worse, at the end of the financing period. Buying a certified pre-owned car or truck that is around 3 years old at the time of purchase is one way to lower what you owe towards a car while still getting a newer vehicle that’s possibly still under a manufacturer’s warranty.
Platte City-Airport Chrysler – Dedicated to Helping You Find Financing
Regardless of whether you lease or finance, you’ll need to factor in the required full-coverage auto policy for both options. And you’ll need to look closely at what exactly you can afford on a month-to-month basis. We recommend using our free car payment calculator to estimate your monthly auto payment.
At Platte City-Airport Chrysler, we’re here to help customers in the greater Kansas City area find the financing option that works best for them. Visit our dealership today, or browse our inventory online to learn more about the cars on our lot.
Or contact our Finance & Lease Center to explore your auto payment options further with a friendly, knowledgeable auto loan specialists.