Whether you're a first time buyer or a veteran pro at car shopping -- you should know the difference between leasing and financing a vehicle.
There are a lot of factors in your decision -- your two most important ones being your budget and your lifestyle. Will you drive it often? Is this more for business or pleasure? Are you planning on upgrading often? Ask yourselves these questions before making your final decision in your next step in the car buying process.
LEASING
When you lease a car, you don't own it. This means that at the end of the lease, you can choose to return it or buy it. The dealership will want to keep it in good selling condition, so it's important that you don't make any customer add-ons or permanent modifications to the vehicle. Any damages or wear and tear considered "not normal" to the dealership's policy has to be fixed before you return it.
When leasing a car, up-front costs typically includes the first month's payment, a refundable security deposit, down payment, taxes, registration fees and other fees specified by the dealership.
Compare the monthly payment for a lease with financing -- you will still get the exact same car for less money by choosing lease because lease payments are typically lower than loan payments. Alternatively, setting aside a specific amount of money in your monthly budget may actually allow you to drive a more expensive vehicle when you lease a car instead of financing it.
Monthly payments factor in the car's depreciation during the lease term, rent/interest charges, taxes and fees. If you want to end your lease early, there's an early termination charge -- which can be just as costly as sticking with a contract. In the long-term when you lease, the car's future value won't affect you financially but you won't get any equity on your vehicle. Because of this, you'll either have to finance the purchase of the car or lease or buy another.
