Leasing Financing or Cash: What Should I Do?
November 19th, 2016 by Sara
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You've seen the commercials, and now you're getting ready to sit in a chair and sign an agreement for your vehicle. What's available to you? What do these terms even mean? What's the benefit?
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Financing:
With financing, you're borrowing the money from someone else to pay for the vehicle with the intention of paying the entire amount back to that person, potentially with interest. "0%" financing means that you aren't paying any interest, while anything larger means that you will be paying interest to the party you borrowed the money from, beyond the cost of the vehicle.
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What's the end result?
When you finance a vehicle, at the end of the term ("0% financing for 48 months ") you own the vehicle completely, it's yours!
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Leasing:
Leasing means that you are borrowing the vehicle for a period of time. It's like renting an apartment: when you want to move somewhere else (buy a new vehicle) at the end of the agreement, you simply get up and leave (return the vehicle to the dealership and choose your next vehicle). As long as you've made your payments and used the vehicle in normal circumstances, you're set to bring it back at the end of the term and choose your next vehicle. Do you love this one though? Unlike an apartment, at the end of the lease period, you are given the option to buy the vehicle. When you are signing a lease agreement, you will be informed of the cost of buying the vehicle at the end of the term, so you will know the buyout price before you even sign the contract.
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What's the end result:
You don't own the vehicle, unless you buy it outright, but you only have to pay for the portion of the vehicle you use. The tax is based on what you will be using of the vehicle, not the entire value of the vehicle.
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Cash:
Paying with cash is just as simple as buying a cup of coffee. You pay the entire amount all at once, and you drive away with a vehicle that is completely yours.
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So, what's best for you?
If you're still not sure, you can always talk to the financial advisors to get a second opinion.