Car Buying 2022: Should I Lease Or Finance My Car?

Key Takeaways:

1. Automobile leasing is when you make monthly payments to use a car for a set period, typically two to four years.
2. When you finance a car, you essentially take out a loan from a bank or other financial institution to purchase the vehicle outright.
3. Car financing may be your best option if you need an automobile for work or have a long commute.
4. However, leasing might be the better option if you are looking for a short-term solution or don’t want to commit to owning a ride long-term.

When buying a car, one of the biggest decisions you’ll have to make is whether to lease or finance it. Both options have pros & cons, so how do you decide which is right for you? In this blog post, INFINITI of Orange Park will discuss the differences between automobile leasing and financing so you can make a smart decision. We’ll also discuss some factors to consider when making your decision. So, whether you’re darting the market for your first car or are considering upgrading, keep reading for advice on choosing the best option.

Everything You Need To Know About Automobile Leasing

Alright, let’s start with the basics. Automobile leasing is when you make monthly payments to use a car for a set period, typically two to four years. At the conclusion of your auto lease, you can either buy the car or return it to the dealership.

You only pay for the depreciation during your lease term when you lease a car. This is different from financing a car, where you’re paying off the entire purchase price of the vehicle plus interest. Because of this difference, monthly lease payments are usually lower than monthly finance payments.

Confused? Don’t worry. We’ll explain everything in more detail below.

How Does Automobile Leasing Work?

As we mentioned, when you lease a car, you’re only paying for the depreciation that occurs during your lease term. You’re not paying for the entire purchase price of the vehicle like you would if you were financing it.

The amount of money you pay each month is determined by several factors, including:

• The length of your lease term
• The number of miles you plan to drive each year
• The type of vehicle you’re leasing
• The dealer’s markup on the vehicle’s lease price

You must also pay off a security deposit when you sign your lease agreement. This deposit is usually equal to one or two monthly payments. It covers any damage that may occur to the vehicle during your lease.

What If I Decide to Buy That Ride?

If you decide to purchase the vehicle, you will be responsible for paying any due taxes and fees. You will also be responsible for any damage to the vehicle during your lease.

If you decide to return the vehicle, you will be responsible for any damage that has occurred to the vehicle during your lease. You will additionally be responsible for any early termination fees outlined in your lease agreement.

Pros & Cons of Automobile Leasing

Leasing a car has both advantages & disadvantages.

Pros:

• Lower monthly payments than financing a car.
• No need to stress about selling the car when you’re done with it.
• You can get a new car every few years.

Cons:

• You’re never really the owner of the car.
• You may have to pay extra fees if you exceed the mileage limit.
• The car may not be in good condition when you turn it in.

Everything You Need to Know About Car Financing

Alright, let’s move on to financing. When you finance a car, you essentially take out a loan from a bank or other financial institution to purchase the vehicle outright. You will then make monthly payments on the loan until it is paid off.

Once the loan is paid off, the car is yours, and you can do it as you please.

One of the benefits of financing a car is that you will have full ownership of the vehicle once the auto loan amount has been cleared. This means you can sell, trade, or modify it as you see fit. That’s why around 81.24% of cars in the U.S. car market are financed.

Confused Again? Here’s An Example:

Let’s say you want to snag up a car for $20,000. You have $4,000 to put down as a down payment, so you’ll need to finance the remaining $16,000.

If you get a loan with an interest rate of 10% and a four-year repayment period, your monthly payments will be about $448.

You will have paid a total of $21,216 for the car at the end of the four years. Of that amount, $5,216 will be interest charges.

Just remember that the interest rate on your loan will affect your monthly payments and the total amount you pay for the car. A higher interest rate will cause higher monthly payments and a higher total cost for the car.

The Pros & Cons of Car Financing

There are both advantages & disadvantages to financing a car.

Pros:
You can get a car with little or no money down.
You may get a lower interest rate if you have good credit.
You can sell or trade the car before the loan is paid off.
Cons:
The lender can repossess your car if you don’t make your payments.
You will pay more for the car over time because of interest charges.
Your monthly payments may be higher than if you had leased the car.

So, Which Is Better? Car Lease or Finance?

Well, the answer to this is two-fold. It depends on your needs & your budget.

Automobile leasing might not be the best option if you need a car for work or have a long commute. This is because, with an auto lease, you can only drive a certain number of miles per year. You will be charged for the extra mile if you surpass that limit. So, if that’s the case – we suggest you go for car finance.

However, leasing might be the better option if you are looking for a short-term solution or don’t want to commit to owning an automobile long-term. With a lease, you can trade in or return the car at the end of your lease term.

Oh! and if you’re in Neptune Beach wondering if a new car is best for you or a CPO one – Here’s our blog, which can help you decide!

Looking To Snag Up a New Car in Fruit Cove, FL? We Can Help!

INFINITI of Orange Park is your premier dealership for new and used INFINITI vehicles in the Fruit Cove, FL, area. Our adept technicians & mechanics, and friendly staff is here to help you with your car financing needs.

We offer accommodating financing options to fit your budget and needs. We also have a service center on-site to help you keep your car running like new. Stop by today and test drive the new INFINITI Q50!

We look forward to meeting you on your trip here!