Why Car Finance Is Better Than Leasing

Looking for a car but you’re not sure which financial option to secure it? You might need to ask yourself a few questions and do a bit of research before you come to your decision. But here are a few things to consider about car finance over leasing to help you make your decision.

Car finance is better

Car finance, while not for everyone, has a few trump cards that other options, in this case, leasing, do not have going for them.

Cost-effective

But what about the interest you will pay? A car loan can be the most cost-effective method for obtaining your car because, short of paying cash, it tends to be the cheaper option in the long term, in part because you will own a vehicle at the end of the day. A vehicle is a personal asset.

Transparent total

The cost of the vehicle is divvied into a set repayment schedule. Some loans come with a balloon payment at the end, but that’ll depend on the length of the term you decide to have. But you’ll know the total amount you’ve agreed to pay.

Convenient setup

You can organise your loan from pre-approval, application, to approval online, over the phone, or in person with a finance broker if that’s you.

Lightning-quick process

From enquiry, you can be pre-approved in a flash. Once you hit the apply button, hang up the phone, or down that complimentary coffee in the broker’s office, in a matter of minutes you can be approved and heading for the car dealership.

Owner freedom

As the owner of the car, you can do what you want without restrictions. You want to modify the car? Go for it. You want to go on road trips without fear of going over your mileage? Explore. You no longer like the colour and want to put on a car wrap? Wrap away.

Leasing a car

It might sound attractive to have a lower, fixed monthly payment with servicing, maintenance, and set mileage built into the price. You may or may not need a deposit, and you get to drive a new car. And the monthly repayments are often lower than a car loan.

Beware the catch

When it comes down to it, leasing is not cheaper. If you go over what’s considered normal wear and tear, and you go over the mileage allotment, you will pay a lot for those mistakes. Don’t be fooled into thinking you aren’t paying for the depreciation of the vehicle, because you are. It’s built into the price. When the sun goes down, leasing ends up being a false economy and a car loan looks better and smells sweeter.

It’s not yours

If you are a parent, a pet owner, or even a sloppy eater, you might not want to lease a vehicle. If you park in public car parks often, chances are pretty high for dents and scratches to occur that you didn’t even do. The potential for costly damage is too great. 

And the car isn’t yours, so you will never relax and feel at home in it.

And, as the car isn’t yours, you’re not walking away from the deal with an asset. You are just walking away. You won’t be able to count the lease toward building your credit rating either because you are renting. No credit has been given to secure your lease.

Breaking the lease

If something comes up and you need out of your lease, penalties for breaking your contract will be brutal.

The bottom line

Buying a car with a loan provides you with an asset, credit history, the freedom to modify and use your vehicle without fear of repercussions. After the loan is paid in full, you can keep the car, trade it in or sell it to the highest bidder. At the end of the lease period, you will have a bill to settle, but no car and no added credit score to show for your efforts.

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Created on Apr 10th 2020 04:28. Viewed 411 times.

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