IS IT BETTER TO BUY OR LEASE A CAR IN BARRIE AT GEORGIAN CHEVROLET BUICK GMC?
Some people like to buy a car, but others prefer lower monthly payments and the flexibility that comes with leasing. Keep reading to learn about your options.
HOW DO VEHICLE LOANS WORK?
Purchasing a car typically means taking out an auto loan. If you’re in the market for a new vehicle you’ve probably spent a lot of time researching your options. When you take out a car loan from a financial institution you receive your money in a lump sum, then pay it back (plus interest) over time. How much you borrow, how much time you take to pay it back and your interest rate all affect the size of your monthly payment.
Three major factors that affect both your monthly payment and the total amount you’ll pay on your loan:
The loan amount – It can be significantly less than the value of the car, depending on whether you have a trade-in vehicle and/or making a down payment
The annual percentage rate – Usually referred to as the APR, this is the effective interest rate you pay on your loan.
The loan term – This is the amount of time you have to pay back the loan, typically 36-84 months.
FINANCE VS. LEASE
LEASING A VEHICLE IN ONTARIO
When you lease a vehicle, you enter in to a contract with a dealership or leasing company that provides you with use of the car for a set period of time. In exchange, you have a set monthly lease payment for the duration of the lease and you are responsible for the insurance and maintenance. At the end of the lease, you can choose to buy the vehicle or return it to the dealer and then lease or buy something different.
Benefits of Leasing
Lower Monthly Payments – you only pay for the depreciation in value of the car not its full value
Shorter Terms – leases usually don’t last as long
Newer Vehicles – because you don’t buy the car you can choose instead to lease another new vehicle at the end of the term
However, there are restrictions on what you can do with the vehicle that come with extra penalties if you do not adhere to them.
FINANCING A VEHICLE IN ONTARIO
When you finance a vehicle you are getting a loan directly from a bank, dealership or credit union to buy the full value of the car. You can negotiate the length of time required to pay off the loan, the interest rate and monthly payments.
Benefits of Financing
No Restrictions – because you’re buying the car you own it and have no restrictions on how you use or customize it
Early Loan Termination – at any point you can pay off the full remaining value of the loan with no extra penalty fees
– you can get a car loan for used vehicles rather than just new ones and you resell and use the value to pay off your loan early