What’s the difference between leasing and financing?Blog Jun 26th, 2022
Buying a new vehicle can be a daunting process. Whether it’s finding the right vehicle for your needs, or choosing the best way to pay for it, the whole thing can be intimidating to say the least. Here at Welland Honda we believe in honesty and transparency, so you can feel comfortable and confident in buying from our dealership. To help take a bit of the stress away from purchasing your next vehicle, we’re going to take a look at the difference between financing and leasing, including a few points that might help you make the decision of whether to lease or finance by yourself.
What is a vehicle lease?
Leasing a vehicle is similar to renting an apartment. You pay a small price to drive the vehicle every month, for a set term. Often, you’ll actually have the opportunity to purchase the vehicle when your lease is up.
What is vehicle financing?
Financing a vehicle means you’re taking out a loan to purchase the vehicle over time, similar to a mortgage (continuing the home analogy). You’ll make monthly payments over a set period of time, at the end of which you’ll own the vehicle.
Pros and cons of leasing vs financing
There are a number of different reasons or circumstances that can make the choice between leasing or financing a vehicle better for your particular situation. Below we’ve listed a variety of reasons why you may consider either choice, but a member of our finance team will always be happy to sit down with you and discuss your options to determine the best course of action.
Leasing Pros & Cons
- You can drive a new vehicle every few years
- You can enjoy new technology and features more often
- You’ll pay a lower monthly payment
- The vehicle will always be covered under warranty
- A smart choice if you have a stable lifestyle and budget
- An inexpensive option if you have prime or super prime credit
- You can’t make changes to the vehicle
- You can often only drive a specific amount over the course of the lease
- You can get charged early termination fees for ending your lease early
- You won’t own the vehicle, or build any equity
Financing Pros & Cons
- You will build equity
- You will own the vehicle at the end of the loan
- You can customize your vehicle
- You’ll have higher monthly payments
- You can set your term longer or shorter
- Vehicle repairs may not be covered (if warranty is over)
- Can help you rebuild your credit
- A good option if you have subprime credit
- You can sell the vehicle
Of course, these are just some of the factors you may want to consider when it comes to the choice of leasing or financing. For example, if you were moving to another country for a couple of years for work, it may make more sense to lease than to buy outright. Whether you use the vehicle for work or not can also play into your decision. No matter what you choose, a member of the Welland Honda finance team can help you make the right choice for your current needs. Simply stop by to chat with a member of our team, or explore your options via our finance page, here.