There is a huge difference between leases and purchase loans. Leasing finances the operation of a car whereas purchasing with a loan finances the purchase of a vehicle. Both have advantages as well as deficiencies, but again, it all depends on everyone’s lifestyle. The consumer must contemplate both financial and priorities, because when you lease a vehicle, you will essentially have a new car every two or three years with no major repair risks. If you’re planning for the long haul, you need to decide whether long term cost savings are more important to you than lower monthly payments. Having ownership of your vehicle might be of greater value to you than low up-front costs and no down payment. The same goes for if you would rather pay off your vehicle and live debt-free for a certain period of time.
What it Means to Buy
Say you have opted to buy a vehicle. This means you would pay for the entire cost of the vehicle no matter how many miles you get out of it or how long you decide to own it. Your monthly payments will be higher compared to leasing, because you would make a down payment, pay sales taxes in cash or include them in your loan, and finally, pay an interest rate predetermined by your loan company based on your credit score. The first payment is due one month after you sign your contract. Later on, in your ownership of the car, you can sell or trade it for its depreciated resale or trade value