Finding the perfect car for sale is easy to do, but the thing that people struggle with is deciding whether they should finance or lease that specific vehicle. A major reason for this is because consumers have a difficult time understanding that these two methods of buying an automobile affect them differently. There are some people who would rather receive the benefits from an auto loan, while others may prefer the rewards from a leasing agreement. However, either method can be used to help you get the best new or used automobile at an affordable cost.
As a consumer you must know what kind of automobile you want, as it has a large impact on whether leasing a car or getting auto financing is best for you. Now, every car buyer knows that choosing a new or used car is predicated on how their funds are constructed, which makes picking a car buying method very simple. This is especially true for those who are looking to save money on a pre-owned vehicle, because financing or paying cash are the only options available.
The same cannot be said for new car sales, as the options to lease or get a loan are both viable decisions that people consider. However, there are advantages and disadvantages that exist between auto financing loans and lease deals, that need to be considered.
|Ownership||Once you sign an auto loan you are placed in position to be the owner of your car at the end of your loan term.||A lease is just renting a car, for a short time span, that must be returned to the dealer at the end of the lease.|
|Monthly Installments||Vehicle financing tends to feature higher monthly payments, due to the requirement to pay off the entire purchase price along with interest and other fees.||The payments on car lease agreements are lower, due to you only paying off the depreciation of the auto, as well as other charges.|
|Up-Front Payments||Most auto finance lenders will require you to pay a down payment, taxes, registration and other fees.||Lease companies often ask you to pay the first month's payment, security deposit, taxes, registration, and occasional down payment.|
|Condition of Car||How you treat your vehicle or added miles does not add additional fees or impact monthly payments, but it will lower your car's cash value if you plan on selling or trading it in later.||Your auto lease contract outlines how many miles you can put on the car and you must return it with no serious damage done to it. Otherwise you will be charged more costly fees.|
|Future Value||Once your car loan has been paid off you not only own the vehicle, but any cash or trade in value is yours to do whatever you want with.||A leased auto's future value is less of a concern for people financially, but you end your lease term empty handed.|
By examining the pros and cons that are listed above you can determine whether a lease or loan will provide you the best chance to buy a new car. You just have to remember that while leasing companies only provide people the chance to acquire a new car for a short length of time at a reasonable cost, financing offers you a shot at ownership.
Another thing that will impact a buyer's decision to apply for car loans online or go the route of leasing is how your credit history is constructed. Both lease and auto finance companies look at your credit score and use that to determine your interest rates, as well as how likely you are to be approved. However, where these two methods of purchasing a vehicle differ is their level of tolerance for people with low credit scores.
It's relatively easy for anyone with a good to perfect credit rating to acquire a vehicle, but a bad credit score takes leasing out of the equation. Lease companies are only willing to work with customers who have exceptional credit histories because of the financial stability that is often associated with them. The complete opposite can be said for car financing to consumers with poor credit, due in part to the lenders and their dealers that Auto Credit Express has partnered with. We have built our existence on offering this type of service to people as long as they are:
Having these basic qualifications can greatly improve a person's chance to get approved for a car loan, but are not as beneficial for those looking to lease.
"They did everything they could do to get me in that car, and they did." Thomas R., Southgate
The requirement to make a down payment on a lease or loan is another factor that impacts car buyers. Most people would prefer not to give additional money to the lender, so that they can have it for any future expenses. However, getting a no money down auto loan is difficult to do if you are applying for vehicle financing, and nearly impossible if you have credit problems.
You must understand that the reason loan companies place such a high level of importance on down payments stems from their need to recover some of the balance on the loan, in the event that the borrower defaults. This can also become important if your credit report shows instances of:
Now, this does not mean that if you are looking to lease that you can't have the same problems. Lease companies are just as focused on these potential credit woes, and will require a down payment if they are found. However, the reason that no money down car leases are more likely to be offered than an auto loan with no down payment, has a lot to do with how that money is used.
By putting money down on a vehicle loan you are essentially shaving off some of the original price of the automobile, which reduces your monthly payments and makes it easier to own your car. This is not something leasing can offer you, as a down payment does not place you closer to ownership, and simply helps you lower your monthly installments. Otherwise, you are hoping that your down payment covers the deprecation of the car, but this fee can easily be addressed at the end of your lease.
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