woman getting the key to her new car

Know the Difference Between Leasing and Buying a Car

Driving down the countryside sounds like a great idea if you have a car. But buying one is not a walk in the park, knowing your financing options is crucial, especially if it is going to be your first car. Fortunately, there are various ways to pay.

One of the most significant decisions that car buyers need to do is to decide how they will pay it. Most aspiring car buyers would either apply for a car loan to finance their car. Meanwhile, others have enough funds to purchase it outright.

For you to make a sound decision, it is worth knowing how each financing options work before you decide on what car to purchase. So to help make things easier, here are a few pointers that you can consider when choosing between leasing or buying a car.

Monthly payments

Compared to buying a car, leasing is much more affordable. Dealerships and other financial institutions barely require any down payment. Some even do not ask for any at all. Leasing a car also means that you will have to pay less when it comes to sales tax. Most states often calculate sales tax based on the monthly payments and not the total cost of the car. This means that you will have lesser fees if ever you are planning to buy it.

Extra charges

But leasing only comes with its disadvantage. When you return a leased vehicle, there is a chance that you will have to pay for using it based on the mileage. You will have to pay extra for every mile that you went over from the allowed distance based on the lease agreement. Another reason you can get charge for an extra fee is if you are terminating the lease early or if it had any unrepaired damage when you returned it.

Possibility of selling

Car salesman handing over the keys for a new car to a young businessman

If you are planning to buy a car, you have the option to either trade it or sell it anytime you want. Unlike with lease, contracts do not confine the owner’s rights to sell the property. However, one catch about owning the car is that its fair trade-in value will always concern you. You need to properly manage the Volvo that you purchased in Auckland so that you can keep its worth.

Physical alterations

Car owners have the liberty to change the way that their car looks any way they want it to be. They are not tied to any contract to keep it in perfect condition. Although scratches can affect its market value, you will not get any additional fees because of it. When it comes to leasing the vehicle, wear and tear charges can vary based on your agreement with the company.

The truth is that buying a car is always cheaper than leasing one in the long run. The longer that you own the vehicle, the more that you will save money from it in the long run. So that you can make a sound decision, you should consider your lifestyle as well as your financial capacity to pay. If you have the means to buy the vehicle and you are genuinely interested in the car, then feel free to purchase it for yourself.

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