What’s the Difference between Leasing and Financing a Car?

If you’re shopping for a new or used vehicle, you may think about whether you want to lease or finance it. Understanding the differences between each financial option can help you choose the right vehicle for you and stick to your preferred budget. If you’re in the Delray Beach, Florida, area, stop by and visit us at Performance Mitsubishi, and we’ll help with selecting your dream car and preferred payment plan and answer any of your questions.

What’s the Difference Between Leasing and Financing?

There are some similarities but mostly differences between these two financial options. For both options, review your budget and consider how much you can afford to spend. Additionally, it’s helpful to know that with either financial option, we may require a down payment.

Leasing is when you’re paying a set monthly fee to rent a vehicle for a certain amount of time rather than making a payment each month to own the car. To lease a car, you can come to our dealership and search for a brand new vehicle that fits your needs. Then, you can work with our team to negotiate terms that work for you, which include the mile limits, lease dates, payment plans, and additional fees. From there, submit your credit for approval with our team, and then you can sign the lease agreement form.

Financing is when you’re making monthly payments, which are often higher than monthly lease payments, but you can own the vehicle after paying off the loan. To finance a car, you may visit us at Performance Mitsubishi, where you can apply for an auto loan. Your auto loan can process through your financial institution, or we’ll help you with the process. If you choose to finance, and before you get a loan, you can apply for financing with our dealership for pre-approval to help the process move efficiently and effectively for you.

Pros of Leasing

There are a few advantages to leasing a vehicle, including a lower monthly payment than if you were to finance a vehicle. A lower monthly payment is an option when you lease because you’re not paying for the entire value of the car. You’re paying for a portion of the car’s value when you’re using it, which is deprecation. Deprecation is when the value of a car declines once it leaves the car lot, and depreciation is what you’re paying for when you lease it.

Additionally, you can work with your dealership to use the warranty on your vehicle if it were to encounter damages or to work on its regular maintenance. And once the lease is up, you have the option to choose a new car to drive and start a new lease.

Cons of Leasing

The potential drawback to leasing a vehicle is paying back the money you spent on customization. When you lease a car, you’re still able to add customizations to it, but once your lease ends, you lose the money you spend on customizations as it’s taken in depreciation. Leasing a car can also determine how many miles you can drive. The dealership may charge overage fees if you go over the agreed-upon amount of miles. The only way you can avoid these fees is if you were to purchase the car after your lease ends.

Pros of Financing

The benefits of financing a vehicle include owning the vehicle once you’ve finished paying back your auto loan with interest. After you’ve made your final loan installment, you officially own the vehicle in your name. Additionally, you can add whatever customizations you prefer to add to your vehicle, which may add value if you were to sell or trade-in your vehicle in the future. Another benefit to financing a car is you don’t have to worry about if you’re driving over the allotted mileage. You’re able to drive as long and as far as you prefer.

Cons of Financing

A potential disadvantage of financing is while you’re able to drive your car for as long and far as you desire, ultimately, it lowers the vehicle’s value if you were to sell or trade it in. Another possible disadvantage of financing a car is that you may experience higher monthly payments than if you were to lease a car. You’re also responsible for the maintenance and repairs of the vehicle if it were to sustain any damage, rather than relying on your warranty.

How To Determine if Leasing or Financing Is Right for You

If you’re considering leasing or financing a new or used Mitsubishi, our team can help you find the right option for you and your budget. You may find that different phases of your life are better suited for particular financial options. For example, if you have a tighter monthly budget for a while, you may find leasing is your best option because of the lower monthly payments. When you choose to lease while on a budget, it’s vital to watch how many miles you’re driving.

So, if you’re on a budget but you have to drive a significant amount of miles with the car, you may consider financing a car. You can work with the dealership and the financial institution that gave you the auto loan to determine your monthly payments. Here are some considerations to think about with each financial option’s pros and cons before choosing one:

• Review your budget.
• Determine your approximate monthly payment.
• Analyze the average number of miles you drive, typically.
• Determine if you’d like to make customizations to the car.
• Consider if you want to own a car or choose a new one for each lease term.
• Think about if can benefit more from selling or trading in a vehicle than signing a lease.

Here at Performance Mitsubishi, top-quality customer service is essential to us. If you have any other questions about determining if leasing or financing is for you, contact us for more information, and a member of our team will get back to you.

Image by Jeff Hardi is licensed with Unsplash License