Car Finance Options – Should You Lease or Buy?

Car Finance Options – Should You Lease or Buy?

When it comes to buying a car you’ll typically find yourself presented with a variety of options. But two of the most prominent relate to leasing or buying the vehicle in question – and with both solutions bringing their own benefits to the table, you could find yourself struggling to choose between the two.

The benefits of buying with the aid of a loan

One of the most prominent and appealing factors of buying a car with a loan is the freedom of choice that you’ll have when selecting a vehicle. Once you’ve been approved for a car loan, you’ll be able to pick and choose from any number of models that fall within your borrowing budget.

There’s also the option to define how many repayments you’d like to make, with many lenders being willing to stretch the costs over the course of 60 months. Once you have made your repayments over the set period of time, you will then own your vehicle outright. The longer you take to repay, the more interest you’ll be expected to cover; but this can also lessen the pressure of meeting higher amounts each month.

You might even find that you are presented with more repayment options, including the duration (or term of your loan) and whether you opt for a residual or a balloon payment method instead. And as your loa

 

n will be secured against the vehicle that you purchase; you may find your interest rate being reduced in the process.

Lastly, the fact that you will have been given the cash by your chosen lender means that you likely won’t have to turn to your own savings to cover any costs. This has its own appeal that’s pretty self-explanatory, as who wouldn’t want to save money when presented with the option?

And what about leasing a vehicle instead?

If you choose to lease a car rather than have a secured loan, you’ll typically be able to pay a lower amount upfront with lower monthly repayments as you are not owning the car.

You also typically won’t be responsible for the day to day functionality of the vehicle as far as its mechanisms and parts are concerned – meaning that if you choose wisely, you could sign up to a package that includes maintenance of the car itself.

And as the amount that you owe will be predetermined before you sign on the dotted line, you shouldn’t expect to be caught out with higher bills, or demands for more of your hard earned cash. Your contract should cover this and you’ll likely want to ensure that it mentions the exact sum expected for each repayment (much as you would when renting a home).

Another major advantage of leasing a car instead of buying one is that you won’t be tied down should you no longer need to use it after the end of the lease agreement. You’ll be expected to cancel your contract, but as you can define the period that you borrow the vehicle for, you will probably find this option far more appealing than being stuck paying off a loan for a car that you no longer use.

You might actually find yourself enjoying the vehicle so much that once the lease period expires, you may decide to purchase the car outright. You could also opt to upgrade your vehicle to stay up to date with the latest model, therefore ending your previous lease and taking on a new one.

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Disclaimer -This page/article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.

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