When it comes time to buy a car, most people are faced with two options: leasing a car or taking out a loan to buy the car outright. But deciding what is truly best for you and your financial situation can be tricky.
Both options are considerable financial responsibilities and should not be taken on lightly. Both have their own set of advantages and disadvantages, and may suit different people based on their lifestyles and financial situations.
But how do you know which is right for you? In this article our experts provide some important points of consideration when it comes to leasing or taking out a loan for a car.
Why Lease a Car?
Why lease a car if at the end of the day you’ll never own it? Surely that’s money that’s just going down the drain? Well, actually, there is a bit more to it than that and leasing a car has many benefits for the leaser.
Leasing works well when you only plan on driving the car for a short period of time. Perhaps you like to get a new model every couple years. Or perhaps you travel a lot and have nowhere to keep a vehicle of your own when you’re away on extended trips. In this case, leasing could actually save you money as the amount you spend leasing a car may be less than the loss you would make when selling a car that you’ve recently bought.
You have so many great options when it comes to car leasing in Byron Bay. Simply contact our team at ZEP Finance should you require any additional info.
Potential Problems with Leasing a Car
Like we mentioned before, when leasing a car you will never truly own it. That means that the money you pay towards leasing a car each month goes straight to the leasing company and does not go towards paying the car off.
Remember that when returning a leased vehicle, the car will go under immense scrutiny and you’ll have to pay for any damages that aren’t considered ‘normal’ wear and tear. So, just because the car is leased, you should not drive it like a maniac. You need to drive carefully and treat the car as if it were your own unless you want to incur further costs.
Why Take out a Loan for a Car?
Taking out a loan in order to buy a car is probably the more popular choice among the two. It works by taking out a loan from the bank, car dealership or finance company in order to buy your car ‘upfront’ and then slowly paying back the loan each month until you legally own the car yourself. The entire duration of the repayment stage, the car is still in your name.
There is usually some form of interest involved and it is best to look at your options to ensure that you’re getting the best deal. Once calculated, some interest rates can become absurdly high, so never take out a loan that has monthly repayments you are unsure about. Be safe and speak to a trusted financial advisor to ensure that you can afford the repayments and that they are worth it in the long run.
The major advantage of this option as opposed to leasing a car, is that you legally own your vehicle, which is a huge asset. Once your loan is paid off, all you’ll need to worry about is the general maintenance and upkeep of your car.
Potential Problems with Taking Out A Loan For A Car
One of the major issues about car loan repayments is that you may decide to immigrate or that you want a newer model, and then you still have the instalments to worry about. Selling or handing over a car that still needs to be paid off can be quite a confusing process.
Also you’ll also definitely need to look into car insurance so that if your car is totalled, you’re not stuck with paying off an invisible car for the next three years.
[CTA] Want more information about car loans and car leasing in Byron Bay and surrounding areas? Contact our professional team at ZEP Finance today.