There are a few different ways that one can go about automobile financing and those include:
- Auto Loans
- Auto Leasing
Both of these have their benefits and draw backs, and must be thoroughly considered prior to making any sort of decision. When buying a vehicle, most individuals take out a loan to pay for the vehicle, and then make monthly payments on the loan. The loan is also based on two main charges: principal charge and a finance charge. While these charges are similar to that of the lease, they are slightly different. A principal charge is based on the total value of the vehicle, which the finance charge is the interest placed on the loan.
When you buy a vehicle, it is yours to keep as long as you make the monthly loan payments. You are free to drive as much as you want and make any customization’s to the vehicle.
However, there are a couple of disadvantages:
- A monthly loan payment is always higher than a lease payment.
- When you get tired of the vehicle, you have to sell it on your own.
Leasing a vehicle is completely different and has a variety of aspects that make it typically appealing to the average consumer. Some of the key appealing points in leasing include:
- Lower monthly payments
- Lower down payments
- Lower costs of maintenance
Almost everything about leasing is negotiable. If you know all the fees involved, you can lower your monthly payments, negotiate the purchase price of the car at the end of the lease and contract additional miles on top of your mileage limit.