Leasing and Financing, Which is For You?
Typically consumers are fairly set in their ways when it comes to leasing or financing, they are diehard lease or diehard finance. Part of that is personal preference, but some of that is because consumers stick with financing vehicles because they don’t understand all of the differences between financing and leasing.
Financing a vehicle is a little less complicated than leasing a vehicle, but unlike leasing, a person is stuck with the vehicle until they sell it or it gets so old that it just dies. Consumers that finance vehicles are almost always required to make a down payment. Also, the amount a consumer needs to finance, as well as their credit will also control how much money one pays to the financial institution for their loan (interest), and that amount can be quite high depending on factors such as credit. However, when someone finances a vehicle, they are free to do what they want to the vehicle to make it theirs, like changing wheels or other modifications.
Leasing is thought of as a way for people to be able to get into a car more affordably because a down payment is typically not required, but there are a lot of things that control a consumer’s monthly lease payments and the total cost of a lease may be higher than one expects when they return a vehicle because lessees have to follow more rules during their ownership.
One thing many people assume about leases is that there are only two available lease terms 24 months or 36 months and one annual mileage cap of 12,000 miles, but that is incorrect because lessees can choose from a couple different options. Typical lease terms are 24, 36 or 48 months and various annual mileage allotments range from 5,000, 7,000, 10,000, 12,000 and 15,000 miles per year and the monthly cost to lease a vehicle is determined by several factors. Typically, the shorter the lease, the lower the monthly payment and the lower the mileage the lower the monthly payment, and the most common combination of the two is usually a 36-month lease at 10,000 miles per year.
Another confusing aspect about leasing a vehicle is what happens when someone returns it and that’s where it is important for a consumer to pay attention when signing their lease contract. When signing a contract consumers should find out the cost per mile if they go over their mileage limit, as well as what types of fees they may pay if they return the vehicle with some damage. Another great question to ask is, what the dealership requires the thickness of the tire tread to be to avoid getting charged when returning a lease? There are, however, some protection plans that can be purchased for very little money to protect the lessee from a big bill at the end of their lease.
Leases are a great way for people to be able to affordably get into a car and consistently have newer car models, however, there are a lot of things a lessee needs to know before going under contract.
What’s the best option for you, financing or leasing? University Dodge has both options and we have some great deals on a variety of our models. View our Ram truck or Dodge inventory online here.