Leasing and Financing Plans
Vehicle Financing
Vehicle financing refers to the process of obtaining a loan to purchase a vehicle. When you finance a car, you borrow money to cover the cost of the vehicle. The loan is then repaid over a specified period, in installment payments (monthly, semi-monthly, bi-weekly or weekly), which include both the principal amount borrowed and the interest charged by the lender. The vehicle serves as collateral for the loan, and once the loan is fully repaid, the ownership of the car is transferred to the borrower.
Benefits of Financing
- It’s possible to build equity if you keep the vehicle long enough
- Being payment-free after the loan is paid in full
- Once the loan is paid off, you own the vehicle
- No mileage restrictions
- Keep the vehicle for longer
Vehicle Leasing
Vehicle leasing involves making payments on a vehicle for a specified period, usually two to five years, with the option to purchase the vehicle at the end of the lease term. Instead of paying for the entire cost of the vehicle, you make payments covering the vehicle’s depreciation during the lease term, along with interest and fees. At the end of the lease, you can choose to buy the vehicle, return it and lease a new one, or simply return the vehicle walk away.
Benefits of Leasing
- When the lease term is up you can return the vehicle, return it and lease something new, or purchase the leased vehicle for the guaranteed residual value.
- Have a vehicle that is under warranty for most or all of your lease term
- Guaranteed residual value (what the lender feels the vehicle is deemed to be worth at the end of the lease term)
- More options than financing because of the shorter leasing term. If your lifestyle changes being your term is shorter, you can upgrade or downgrade your vehicle more often
- Drive a new vehicle every 24-60 months
- Most often leases offer a lower monthly payment
- You only pay for the vehicle’s depreciation during the lease
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