Trying to decide whether financing a car with an auto loan or leasing it is right for you? Financing has several important benefits that you should keep in mind.
1. You’ll Own the Car
This is the most obvious benefit, but also the most significant. When you pay off your auto loan, you’ll own the car, and you’re free to do whatever you want with it. You could trade it in, continue driving it or sell it.
The car won’t be worth nearly as much as it was when you bought it, but it will still have some value. When you lease a car, you don’t have anything to show for the money you spent after your lease is up.
2. There Are No Mileage Limits
Every lease contract will include an annual mileage limit. The standard amount is 12,000 miles per year, although some leases only allow 10,000 miles per year. You may be able to negotiate more, such as a 15,000-mile contract, but this will cost you more in monthly payments.
If you drive often or need to commute a long distance, you may end up going over the limit. This can cost you quite a bit in overages. You won’t need to worry about that when you finance a car.
3. You Can Customize the Car
Want to be able to make changes to your car? Then you’ll want to finance it. With leasing, you need to return the car in a similar condition, which means you can’t get a new paint job for it or put on a new set of rims. You technically could, but then you’d need to have it back in its original condition when you returned it.
4. You Avoid the Typical Leasing Costs
There are fees associated with financing a car and leasing a car, but leasing a car has extra fees you don’t need to pay when you finance. For example, you’ll likely need to pay an acquisition fee when you lease, and you may also need to pay a security deposit.
5. You Aren’t Responsible for Excessive Wear and Tear
You obviously don’t want to put too much wear and tear on a car you’re financing, since that will lower its value. But at least you’re able to without getting charged anything. With a lease, you’ll either need to get any excessive wear and tear fixed, or pay extra charges when you turn the car in.
6. Negotiating Is Often Easier
You’re able to negotiate the price or a new car whether you buy or lease it. However, on average, a car dealership will make a larger commission on a car purchase than it would on a car lease. Because of this, you can typically secure a better deal buying a car than you could when leasing a car.
7. You Have More Flexibility with Financing
When you finance a car, you can structure your loan more to make sure it fits within your budget. You may be able to pay more upfront to lower the amount you pay in interest and monthly, or you could opt for a higher monthly payment and a lower upfront cost.
Although you can do this to some degree with leasing, financing is undoubtedly more flexible.
8. You Don’t Need to Go Car Shopping as Frequently
Getting a new car is a process whether you buy or lease. The difference is when you buy, you won’t need to shop for a new car as often. When you lease, you’ll need to go car shopping every time your lease is up, and the standard lease term is three years.
If you’re the type who abhors going to the dealership, you’re better off buying a car you want for the long haul.
Leasing has become more and more popular among consumers, but from a value and convenience perspective, financing a car is still the superior option. You’ll build equity as you make your loan payments, and once you finish paying off your loan, you can say goodbye to that monthly car payment.