When making the decision to acquire a new or used car, many others are yet to come. One of them lies in the selection of a lease or a loan for the financial plan with this new property.
But what is the difference between one and the other? What advantages or disadvantages do they have? Who chooses which of the alternatives? Given these questions, we have decided to offer you a brief guide to each of the terms and their characteristics.
Let’s talk about a “lease”
Also known as a lease, it is a financial modality that, after signing a contract, enables the person to use that car for a limited amount of time or miles. Through the “read” you do not become the owner of the car and you must return it when the time or mileage stipulated in the contract ends.
According to the United States Office for Financial Protection of the Consumer, monthly payments in this mode are likely to be lower, but are aimed at the depreciation of the vehicle plus rental charges.
Another consideration that you should keep in mind is the responsibility of paying cancellation charges at the end of the contract. On the other hand, another factor that you should take into consideration is that you can buy the vehicle once the lease contract ends. Regularly, a lease can be from two to four years or between 10 thousand to 15 thousand miles.
People who like to have a new car regularly or want to opt for a luxury model often the “lease” as a financial option. Similarly, this option helps those who must have the latest technology in vehicles and those who change cars frequently.
Now the loans are …
For their part, the loans present the option of requesting an agreed amount of money directly from the selected banking institution. It is with the loan that you agree to pay a stipulated amount plus the financial charge that is agreed upon. The amount of payments or time of responsibility of payment varies according to the agreement reached.
With this loan, you pay directly to the store where you purchased the vehicle and your contract is then maintained with the selected financial institution.
Through the loans you can compare prices and credit options to learn more about your economic reach. Although the payments are higher than in a lease, the part of each of them goes towards the purchase price of the car.
Unlike leasing or leasing, with the loan option there is no mileage limit and it is the buyer who assumes the risk of depreciation of the vehicle. Regularly, a loan repayment term to finance cars can last from four to six years.
The people who most frequently resort to the loan are those who will have or want to have a car for many years.
Now you have a more comprehensive view on the loan and leasing and the advantages and disadvantages of each. Remember before making a decision, that for both options you should consider your monthly spending plan, determine how much more you can pay and which of the two options fits your needs in this way you can choose the most convenient option for you.