Key Takeaways:
- Leasing vs. financing a car is a big decision.
- Consider your needs and budget before making a decision.
- Talk to your financial consultant if you’re unsure which option is best for you.
- Feldman CDJR of Woodhaven, serving Detroit, MI, can help you figure out which option is best for you!
So, you’re hunting in the market for a new car. Congrats! It’s an exciting purchase, but it can also be daunting, especially if you don’t know where to start. Should you lease your car or finance it? What are the benefits of each option? How do you know which is right for you?
Don’t worry – Feldman CDJR of Woodhaven will help break it down for you. Below, we explain the key differences between leasing and financing and give you a few tips on determining which option is ideal for your needs. Keep reading to learn more!
Car Financing: All You Need to Know
Alright, let’s start with financing your car. Auto finance has been the choice for most car owners in the United States for years. Let’s explore what it entails:
What Is Car Financing?
When you finance your car, you’re essentially taking out a loan to cover the cost of the vehicle. You’ll make monthly expenses on the loan until it’s paid off, at which point the car will be yours.
There’re a few different types of loans you can take out to finance your car. The most common is an auto loan, a personal loan used to finance a car purchase. You can also finance your car through a dealer by taking out an auto loan from them or using a home equity line of credit (HELOC).
What Benefits Do I Get If I Go with Car Financing?
There’re a few things to consider when deciding whether car financing is the best option for you.
- One of the most significant benefits of financing your car is that it allows you to build equity in the vehicle. As you make payments on your loan, you’ll slowly but surely own more and more of the car until it’s eventually yours outright.
- Another big benefit of financing a car is that it can help improve your credit score. If you hand out your payments on time and in full each month, you’ll begin to create a positive payment history, which is one of the key factors lenders look at when considering your creditworthiness.
- Finally, financing a car gives you the flexibility to sell or trade in your vehicle at any time without worrying about any early termination fees that might come with leasing.
What Are The Disadvantages Of Car Financing?
Of course, you should be aware of a few potential drawbacks to financing a car before making your decision.
- One of the biggest disadvantages of financing your ride is that you could end up owing more than the vehicle is worth if you have to sell it or trade it in before you fully repay the loan. This is because, as you make your loan payments, the interest you owe will decrease, but the principal balance will decrease much more slowly.
- Another disadvantage of financing a car is that getting approved for a loan can be difficult if you have bad credit. This is because lenders see people with bad credit as higher-risk borrowers, so they may be less likely to back them for a loan.
- If you do decide to finance a car, make sure to shop around for the best interest rate and terms that you can find. It’s also important to read the fine print of your loan agreement carefully before signing anything.
Car Leasing: All You Need To Know
Alright, now let’s talk about leasing a car. This mode of car purchase has recently become popular, keeping in mind that the car leasing market boosted to USD 75 Billion in 2021 – It’s worth discussing.
What Is Car Leasing?
Well, contrary to popular belief, leasing a car is not the same thing as renting one. When you lease an automobile, you’re essentially borrowing it from the dealership or car company for a set period. You make monthly payments during this time, but you don’t own the car outright at the end of the lease.
What Benefits Do I Get?
Now, you might be wondering why a person would want to lease a car if they don’t own it in the end. And that’s a valid question. But there’re actually quite a few benefits that come with leasing a car.
- For one, leasing a car is often cheaper than financing one outright. This is because you’re only paying for the portion of the car’s value you use during your lease. You’re not responsible for the entire value of the vehicle.
- Leasing a car can also be a good option if you like to have the latest and greatest model every few years. Since leases only last for a set time (usually two to four years), you can trade in your old leased car for a new one at the end of your lease.
The Drawbacks Of Leasing a Car
Of course, there’re also a few downsides to leasing a car.
- For one, you never actually own the vehicle. This means you can’t sell or trade it for its full value when you’re done with it.
- You’ll also have to be cautious about how many miles you put on the car. Most leases come with mileage limits (usually between 10,000 and 15,000 miles per year) and charge extra fees if you exceed that limit.
- Leasing a car can also be more expensive in the long run than financing one outright. This is because you’re only paying for a portion of the car’s value and will have to get another lease when your current one expires.
Which Option Is Best for Me?
If you’re unsure about leasing or financing your next car, consider these factors:
- How long do you plan to keep the car? Leasing might be the ideal option if you only need it for a few years.
- Do you put a lot of miles on your car? If you go across the mileage limits in your lease, you could end up paying extra fees.
- Are you careful with your belongings? You may have to pay for damages at the end of your lease if the car is returned in less than perfect condition.
- Do you like having the latest & greatest? Auto leasing allows you to upgrade to a new car model every few years.
- Do you have a steady income? You’ll need to make sure you can afford the monthly payments if you finance a car.
If you’re unsure whether to lease or finance your next car, consider speaking with a financial advisor. They can help you figure out which option is best for your needs.
Here’s How Feldman CDJR of Woodhaven Can Help You!
Feldman CDJR of Woodhaven, serving Detroit, MI, is here to answer all your questions about car leasing and financing.
We want to make sure you’re getting the best deal on the perfect car for your needs, so feel free to give us a call or stop by our dealership. We’ll be happy to help you figure out which option is best for you!
You can apply for auto financing with us today!
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