Key Takeaways:
rnrn
- rn
- Financing and leasing are two options that can help your car purchasing needs.
- Both methods have several pros and cons.
- Financing helps you build equity, modify the vehicle and own the car for the long term.
- Leasing helps if you want to drive several cars over the short term, want lower monthly payments, and don’t mind mileage restrictions.
- An experienced professional at Brownsville Toyota, TX, can help you find the most suitable method for owning a vehicle.
rn
rn
rn
rn
rn
rnrn
When you’re looking to purchase your first car, ads that promise low monthly payments are hard to miss. However, leasing a car may sound like a budget-friendly option to many compared to traditional financing methods.
rnrn
You’ll need to make an intelligent decision regarding monthly payments, fuel expenses, repairs, and maintenance. The best way to compare leasing vs. financing is to understand the pros and cons of each method. So, to help you realize your options better, let’s discuss these pros and cons in further detail.
rnrn
Pros Of Financing Your First Car
rnrn
Lesser Restrictions
rnrn
You can choose to sell the vehicle without waiting until the car loan has been paid off. You can even add aftermarket parts and accessories to personalize your car and have the opportunity to build equity in your first car. However, our streamlined process will help you make an easy transaction if you want to sell your vehicle.
rnrn
No Additional Charges
rnrn
Financing your car will free you from wear and tear, mileage, and modification restrictions associated with a leased car. It means you can also modify the vehicle as per your needs and preferences without having to ask for the permission of the dealership or bank.
rnrn
The Payments End, Eventually
rnrn
Once you make your final loan payment, you can use the money to achieve other financial goals. Additionally, paying off your car’s loan means you’ll incur significantly reduced transportation costs.
rnrn
Cons Of Financing Your First Car
rnrn
Expired Warranties
rnrn
If you finance your car, you may have to pay for repairs out of pocket if the warranty expires before the loan has been paid off. Depending on the time you have owned a car, this can get costly.
rnrn
Stretching Out Payments
rnrn
If you choose to finance your car, you may be required to make payments for up to seven years. It means you’ll be making car payments well after the vehicle has lost its value.
rnrn
Higher Interest Rates
rnrn
Typically, interest rates on auto loans are higher than the interest you’d pay on other kinds of loans, like home equity loans. It’s because auto loans are considered high-risk loans. As a result, you may be paying more for your car than it’s worth.
rnrn
Less Flexibility
rnrn
Once you finance a car, you’re locked into that vehicle until you have paid off the loan. It can be a problem if your financial condition changes and you can no longer afford the payments. You may also have trouble selling the car if you need to get rid of it for any reason.
rnrn
Pros Of Leasing Your First Car
rnrn
Various End-Of-Lease Options
rnrn
You can always purchase the car at the end of the lease by paying out a lump sum balance or returning it to the dealer for another lease.
rnrn
Low Down Payments
rnrn
Leasing usually requires a lower down payment than purchasing, which can be beneficial if you don’t have much money saved. Unlike financing, you won’t be required to pay down the principal amount of the loan.
rnrn
The lease payment generally includes the car’s depreciation amount during the leasing period, monthly finance charges, and sales tax. The depreciation amount is calculated at an annual rate at which the vehicle loses its value.
rnrn
Budget Friendly
rnrn
With leasing, you can even afford a higher-priced car on a tighter budget. A recent model that includes several upgrades can be within your reach, and the costs for getting a lease are often lower than financing costs.
rnrn
Shorter Leasing Periods
rnrn
You can avoid any mechanical issues in older vehicles with shorter leasing periods. Under the manufacturer’s warranty, any maintenance and repair will likely be covered even if the car has mechanical issues.
rnrn
Perks Of Leasing
rnrn
Who doesn’t like a complimentary car wash or scheduled maintenance? There are various perks to leasing a vehicle that can make your life easier.
rnrn
Cons Of Leasing Your First Car
rnrn
You Are Not the Owner
rnrn
Leasing a car is like renting it. You do not have vehicle ownership, so you must start from scratch again after the lease is up.
rnrn
Mileage Restrictions
rnrn
Leasing companies often put mileage restrictions on leased vehicles. You will be charged a fee per mile if you exceed the limit. Lessees are given a limited number of miles they can drive annually – usually 12,000 to 15,000.
rnrn
American drivers can achieve around 13,500 miles yearly, making a standard lease an attractive option. However, going over the limit will result in charges of 10 to 20 cents per excess mile driven.
rnrn
Higher Monthly Payments
rnrn
Leasing a new car can have higher monthly payments than financing, especially if you put little or no money down.
rnrn
Leasing Cycles Are Shorter
rnrn
The typical lease is only suitable for 2-3 years. It means you will have to lease or finance a new car more often than if you owned your vehicle outright.
rnrn
Excessive Wear and Tear Charges
rnrn
If you return the vehicle at the end of its lease with excessive wear and tear, you can be charged a hefty fee for vehicle repairs.
rnrn
Termination Fees
rnrn
You may be charged a fee if you terminate your lease early. It can be a hefty penalty. However, certain agreements can help you cancel a contract early if you are financing your first car.
rnrn
Want to learn more? Here are some essential questions to ask yourself before buying your first car.
rnrn
What’s The Best Option for You?
rnrn
While there are several ways to take advantage of financing and leasing a car, you’ll need to decide what’s best for you. Consider your budget, needs, and wants before making a decision. If you’re looking for low monthly payments, enjoy driving a new car every few years, and don’t mind sticking to a mileage limit, leasing a vehicle may be the best option.
rnrn
On the other hand, financing may be the best option if you want to own a car long-term with lesser restrictions on car modifications and want to build equity.
rnrn
Talk to our professionals at Brownsville Toyota, serving in Brownsville, TX, who will help you understand what’s best for you. We’ll help guide you through both options and answer any questions you may have. Get financing for your next car!
Connect with us
