When deciding between financing vs. leasing a vehicle, the amount of money involved in closing the deal is not the only consideration. Each of these methods of paying for your favorite car have their pros and cons that need to be thoroughly understood and examined. The pros and cons of financing vs. leasing a vehicle should be given due consideration before purchase.

With that in mind, let’s delve into some of the lesser-known pros and cons of financing vs. leasing a vehicle.

Financing a vehicle
By vehicle financing, we mean that a buyer gets assistance in taking a car loan to own the vehicle.

The pros of financing a car include:

• Can pay the depreciated price : If you choose to finance a vehicle that is already a couple of years old, you can easily pay the depreciated price. You just have to be careful and get the car checked, so that you get a properly functioning model.
• Pay less in the long run : Financing a car is actually cheaper in the long run. If you drive the car for several years after you have paid off the loan amount, you are actually gaining complete value for money.

The cons of financing a car include:

• Repair costs : An important consideration of financing a vehicle is to remember that you will be responsible for the repair costs once the warranty has expired.
• Require good credit : If your credit rating is bad, you can forget about getting a good deal on your auto finance. You might get hit with a higher interest rate or even get rejected for your loan.

Leasing a vehicle
In this method, owning a car means you can rent it out for a certain period. After the lease time has lapsed, you get the option to buy the car or return it.

The pros of leasing a car include:

• No need for loan approval : Lease companies do not need to worry as they can take back the vehicle in case of non-payment of dues. So, they do not focus too much on your credit.
• No stress of selling the vehicle : Once your lease term ends, you simply need to return the car to the lease company. You do not need to worry about selling it. This is indeed a major relief as selling can be quite a stressful process.
• Can drive a new car every time : When you lease, you can end up driving a new vehicle every two or three years. So, you can benefit from the latest in technology and also be the envy of many.

The cons of leasing a car include:

• Demands a stable income: Leasing a car demands that you have a stable source of income to make the lease payments. If you lose your source of income, getting out of the contract can be tough and comes with penalties.
• Costs more over time : When your lease is done, you have to return the vehicle and walk away. In contrast, when you finance, you can at least sell your car and get some value for it.