Financing vs. Buying a Used Car
After buying your home, purchasing a car is the most significant financial decision you will make, so you must consider all the options available before signing on the dotted line.
Read on as we discuss these options if you think of buying a used car in Lethbridge.
What is Leasing a Car?
When you lease a car, you pay the dealership for the pleasure of driving the vehicle for a contracted period, which is usually between two and four years.
The monthly charge is constructed from the sticker price of the car, plus taxes and interest.
This monthly charge will be less than a finance charge because you are paying off the vehicle's depreciation for the contracted time.
You will return the car to the dealer at the end of the lease.
What is financing a Car?
To finance a car, you sign a loan contract where the principal debt will include the car's sticker price along with taxes, less the deposit you put down.
As you pay the entire sticker price, the monthly repayments will be higher than a lease agreement for the same vehicle, but you will own the car at the end of the contract.
You will have an asset that you can either sell or drive free of monthly charges for as long as possible.
Which is better: Leasing or Fiancing?
It's essential that you understand the implications of financing vs. leasing a used car.
You will get to drive the latest and greatest vehicle relatively cheaply if you lease, but there can be a sting in the tail. All lease agreements come with a contracted number of kilometres that you can drive on an annual basis. This is usually around 24,000, and if you go over this, you are changed for every additional kilometre driven.
The lease contract will also include terms around the condition in which the vehicle must be at the end of the agreement, and it is unlikely you will be able to modify it in any way. If the car is not in this condition, the dealer will recondition it back to the agreed state, and you will have to foot the bill. All of these extras can add considerably to your lease.
It is correct to say that your monthly repayment on a financed car is higher, but you will have no restrictions on mileage, you can add your own flair to the vehicle, and at the end of the contract, the car is yours.
The decision to lease or buy is personal. If driving a shiny, new car every few years is important to you, leasing could be your best option.
Owning your assets makes good financial sense. If you are willing to pay a little more each month, you will end up with an investment that, if you look after, will mean no car payments for years to come.
As experts in car financing in Lethbridge, we invite you to come in and discuss acquiring your next car with our friendly staff.