Lease or Finance: Choosing the Best Option for Your New Car Upgrade

It's an age-old question. Should you lease or finance your new vehicle purchase? Well, this all depends on your current situation and priorities. Below our experts at Melloy Dodge will go over the pros and cons of each so we can help you make a smart, informed decision.

 

Leasing 

Leasing has become increasingly popular for those who want a new vehicle without committing to a long-term contract. You make payments like normal, but the leasing company retains vehicle ownership. Once the term ends, you return the car to them.

Pros

• Lower Monthly Payments: Payments are often less expensive than loan payments. This appeals to individuals wanting to drive a new vehicle while maintaining a reasonable monthly budget.
• Access to Newer Models: You'll experience the newest features and technologies available. Due to shorter lease terms, you can upgrade every few years.
• Reduced Maintenance Costs: You will likely have to spend less on repair and maintenance as your lease will end before any significant repairs are needed and stays covered under warranty.

Cons

• Mileage Limits: Signing a lease agreement usually includes a limit on the number of miles you can drive. If you don't accurately estimate how many miles you drive in a year and fail to select a lease that fits your driving habits, extra charges could come your way.
• Wear and Tear: Considering normal wear and tear, you'll be responsible for returning the vehicle in good condition. Additional charges will incur if you cause excessive damage or make modifications.
• Early Termination: Knowing the costs and fees of ending the lease early is important. Carefully review the terms and conditions to avoid unexpected expenses.

 

Financing 

Financing a car is when you purchase a vehicle without paying the total price upfront. You usually borrow money from a bank, credit union, or dealership offering from Chrysler Capital to make the purchase. The borrowed amount, plus interest and fees, is repaid over a set period through monthly installments.

 

Pros

• Ownership: When financing, you own the car and can do with it what you wish as long as you continue making payments or pay it off.
• Flexible Financing – Financing terms can be more spread out, which helps you have a lower monthly payment, compared to a lease.
• Credit Building - You can enhance your credit score by taking out a car loan and consistently making on-time payments. This can benefit you in the future when you apply for mortgages or other loans.

Cons 

• Depreciation - As time passes, vehicles lose their value. When financing a car, consider that your loan balance may become higher than the car's actual worth, which is known as negative equity.
• Interest Adding to Overall Cost - You'll likely gain interest charges over the life of your loan, adding to the vehicle's overall price. These can vary based on your creditworthiness and market conditions.
• Higher Insurance Costs: Lenders typically require comprehensive insurance coverage for financed vehicles. This kind of coverage can cost more than basic insurance, increasing transportation expenses.

 

To make the best choice, carefully evaluate your budget and lifestyle. Consider the factors above and weigh the pros and cons of each. This will help you make an informed decision!

 

Visit us at Melloy Dodge today to explore your options and embark on an exciting journey toward owning or leasing your new car. Our sales team of experts are here to guide you every step of the way.