If you’re confused if you should finance or lease a vehicle, let us tell you it all comes down to your priorities. A few drivers equate leasing or buying to just a few cents and dollars, while others have an emotional connection to the vehicle. So, is financing better than leasing?

One can only decide if financing better than leasing when they know about the pros and cons. Let us find out.

Leasing a vehicle

Benefits

• Low monthly payment
  Typically, the cost of leasing is lower than the price of buying. In this case, the down payment required is either zero or little.

• Warranty throughout lease
  In leasing, you are likely to enjoy a warranty throughout the lease period. So, the maintenance cost is less.

• A new car now and then
  When you lease a car, you get to ride a new vehicle every few years. So, you can get your hands on the innovative safety features, modern comfort, and latest technology.

• Chances of affording a better car
  As the lease cost and maintenance cost is lower, you can afford a more expensive car.

• Loan approval not needed
  If your credit score is bad, leasing is the perfect solution for you. It is because leasing companies are never as strict. This is because they know that any time you default, they can take back the vehicle.

Drawbacks

• Always need a stable income
  Leasing a vehicle means that you will need a stable income throughout the lease term to pay for the lease amount.

• Mileage allowance
  There is only a fixed number of miles in car leasing that you can drive in a year. So, anytime you exceed that limit, you will have to bear an additional cost.

• The higher long term cost
  Though the initial cost of a lease is less, you usually end up paying more money than you would have spent if you chose to buy a vehicle.

• Penalties and fees
  Several penalties and fees are involved in leasing a vehicle, such as late payment fees and fees for lease termination before the term.

Financing a vehicle

Benefits

• The long-term cost is less
  Though initial money paid is high, you are building up equity for the future, which can be realized if you decide to trade or sell the vehicle.

• You can sell it
  As you have ownership rights, you can sell it anytime.

• No limit on mileage
  You can drive as many miles as you like.

Drawbacks

• Monthly payments are high
  As you have to bear the full value of the car, the initial payments are high.

• Costly repairs after the warranty
  If the car breaks down after the warranty period, you will have to bear the cost of mechanical problems.

Picking between leasing or financing a car is a financial decision. Thus, you should take adequate time to understand all the aspects of it. Calculate the amount you will bear in the long term and compare it before you make a decision. Regardless of what option you pick, negotiation is a good idea.