Financing vs. Leasing for Your Van – What is Your Best Option?
When buying a new or used vehicle you are probably going to need to take some form of credit. One question that is often asked is whether you wish to finance or lease your new vehicle? Sometimes this can be a tough decision and people wonder if there is any one right answer.
Really it depends upon your circumstances. For one person leasing may be the best option while for someone else financing could be the way to go.
One of the first questions you should ask yourself before making the choice between financing and leasing is to decide what your main benefit of each type of option is? Do you intend on purchasing a new vehicle every two to three years so you don’t have to worry about major repairs? Or is saving money over a longer period of time more important?
Another question is do you want to be consistently making car payments, or would you like to get to a point where no regular payments are in your future? Many people want to be totally debt free even if it is only for a couple of years.
There are differences between financing your vehicle and leasing it. When you buy you are paying for the entire cost of the vehicle upfront. It doesn’t matter how many miles you drive or how long you end up keeping it for. Your monthly payments when buying a car are usually higher than when leasing.
When buying outright you must usually make a down payment, pay all the taxes and you will be assigned an interest rate on your loan. Interest rates will be determined by your credit history.
After you have signed the sales contract your first payment becomes due the next month. You may also wish to take advantage of paying bi-weekly as this often helps you pay off your loan faster.
When you lease a vehicle you will essentially be paying for the part of the car that you have used over your lease period. With a lease you do not always have to make a down payment and you only pay sales tax on each monthly payment. This does vary in some states so it is worth looking into.
With a lease your first payment is due upon signing so you are paying for the month ahead. When the lease period is up you can return the vehicle, purchase it for a pre-determined price or enter into a new lease.
If you are deciding to choose between financing vs. leasing take the time to look into all the details of both options. Make a list of the benefits and the disadvantages to each and try to determine which suits your requirements the best.