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Car Leasing vs Car Financing: What is Right for Me?
Finance VS Car Leasing – To Pay or To Lease for a Car?
If you’re planning on getting a new ride, one of the most important decisions you have to make would be regarding how you will pay for the purchase. The most important question you will need answers to is whether car leasing vs car financing what would be the better option for you. There are cars with different models, makes, contract, and costs to consider before deciding to buy or to lease.
You’ll realise that car leasing vs car financing are very different from each other and each would have their respective advantages and disadvantages too. Taking the time to look at what each of these choices offer is essential to make it easier for you to make the right decisions and to save money.
Car Financing – To Buy A New Car Or Used Cars & Save Money
Car financing involves taking out a loan in order to pay for the purchase of a used or a new car.
You can take out a car loan from specialist lenders. It is also possible to take out a loan directly from the car sellers.
It’s common for borrowers to be asked by the financing provider to put up a deposit first, although this may not always be the case. Once you have secured approval, you can then take the new car and drive away with it right away. The car loan will need to be paid off via monthly installment which includes the total amount you borrowed as well as the interest rates.
Potential problems – Credit, Monthly Payments & Mortgage
It’s important to be aware of the potential issues surrounding car financing:
- Your credit record may not be exactly spotless. While this shouldn’t be reason enough for you to not get a loan or mortgage, but you’re going to have to try harder to find a lender who will be more than happy to approve your loan application despite your less than spotless credit record.
- Some dealers allow credit card payment if you have a high cap amount on your credit card. Most dealers do accept credit card payment but only for a partial payment. Make sure to schedule your payment on your credit card because the interest rate of credit cards are higher. Miss payments can also lower your credit score. Make sure to pay your credit card on time.
- You might not have the funds to make a deposit. While not all lenders will require you to make one, most will. If you haven’t saved enough, then you might not be considered qualified for a loan. Also, if you do get a loan and you end up not making the payments, this can pull your credit score down big time.
- Your car is a depreciating asset. Even right from the moment you drive out of the dealership, your car already starts depreciating. So, always consider this factor when deciding whether or not to take out car financing.
Of course, it is not all downsides. There are a ton of upsides to this option as well.
- For starters, you will be taking out an unsecured loan. This means that you won’t need an asset like another vehicle or your home in order to qualify for the loan.
- It’s quite flexible as well since there are a number of loan types and lenders for you to choose from. You also have the option to borrow how much you want and how long you would prefer to pay the amount back.
- The car is also yours. This means you can do whatever you want with it. You even have the option to sell it, provided that you will keep making the payments.
- You don’t have to deal with a lot of car problems when you invest in new cars.
Car Leasing – To Lease
Leasing works similar to renting a car. You’re going to pay a monthly fee which earns you the right to drive the car around. However, at the end of it all, the car’s really not yours. You’ll need to give it back to the provider.
Getting to know the cons:
- You never really own the car with leasing. You’re just hiring the vehicle and this may not always work for your current situation.
- There are certain fees that will be involved as well. For instance, there may be limitations to the mileage that you’re allowed to accrue and going over might mean getting charged a penalty fee. If you damage the car then there will be penalties as well.
Upsides to leasing:
- A very good benefit to leasing is it would be easy enough for you to get your vehicle changed on the regular. If you like the idea of getting a vehicle upgrade every couple of years or so, then this would be a good option to consider.
- Vehicle depreciation isn’t something you have to be concerned with. The car is never yours to begin with, after all.
Which deals best for me – Leasing or Financing?
Different people have different circumstances and it is not always possible to know which choice will be best for you.
If you wish to keep upgrading your vehicle every so often, then you will find that leasing would work wonders for you. You can look for lease deals so that you can lease cars that are within your budget.
However, if your goal is to have your own vehicle and you wish to own it outright then you will find that car financing would be the perfect option for you.
Look For Deals – Loan, Deals, Payment, & Credit Score
Remember that there are numerous lenders out there that you can rely on to offer you the loan you need. Remember that some lenders tend to be better and some tend to offer better deals compared to the rest. There are also more flexible lenders, especially for bad credit borrowers and you want to find one that works best for you. You don’t have to buy expensive cars such as an Audi, or Aston Martin even if they are in sale. Buy cars that are within your range for you to never miss a payment.
If you do decide to opt for car financing, never jump at the first opportunity you see. Instead, take the time to look around and gather as many details as you can. Our advice before signing any contract, look for lease deals, what insurance is included, look for sale, and the like. Check your contract thoroughly before signing it. Make comparisons between potential lenders and choose the best there is.