Lease vs. Loan: How to Finance Your First Vehicle

Friday, May 29, 2015, 6:00 AM | Leave Comment

Getting your first car is a big step, but you’ll have a lot of decisions to make beyond make, model, and what type of upgrades you want. Perhaps the biggest decision you’ll have to make is whether you’re going to lease a car, or take a loan out to pay the cost.

Both have distinct advantages and disadvantages you should consider.

Lease vs. Loan: How to Finance Your First Vehicle

  • Find a Budget

    Whether you’re leasing the car or taking out a loan, you’ll probably have to come up with a down payment, and you’ll need to make monthly payments.

    Both types of transactions have a range of monthly payments, so there’s something to fit in with just about any budget.

    Before you start car shopping, you should consider how much you can reasonably afford to pay and only look at cars in that price range.

    Dealers like Expressway Dodge will be more than happy to work out a payment plan that fits with your budget.

  • New Cars

    When you lease a car, you’ll always be getting a new car. When you take out a loan, you’ll have a choice of buying a new car or a used car.

    Leasing is likely the better option if you’re the type of person who wants to have a new car every few years. The lease term is usually two or three years, and at the end of the lease, you return the car and can decide whether you want to purchase it or choose a new car to lease.

  • Continuing Payments

    Purchasing a car with the help of a loan is the better option for those who want to finish payments at some point. With the purchase, you’ll only make payments for the duration of the loan.

    Those who lease one car after another will always have a monthly car payment. The tradeoff is that older cars tend to have more mechanical issues.

    Once you own the car, you’ll have to deal with costs associated with fixing it. Since leased cars are new, many mechanical problems fall under the terms of the warranty.

  • Keeping It Clean

    When you lease a car, it’s never really yours. At the end of the lease term, you’ll have to return the car and you could face penalties if you’re over the lease mileage or if there’s a coffee stain on the passenger seat.

    Once you purchase the car, though, you can do with it as you like. You don’t have to deal with the stress of keeping things clean or under a certain number of miles.

Ultimately, there’s no one right or wrong choice when it comes to leasing or buying a car. Each person has to carefully consider his or her own personality and financial situation to determine which the right choice is for them.

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