If you are shopping for a new car, you know that there is more than one way to pay for it. Of course, you can always pay cash, but that is not very common. The most popular way to buy a new car is to take out a loan. Another option, that is growing in popularity is leasing. We are going to compare these two methods to help you decide which option is best for you.

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FINANCING

Most car shoppers choose to take out a loan when buying a new car. With a loan, you will make monthly payments until it is paid off. Once that happens, the car officially belongs to you. You are free to drive the car as much as you want and make any modifications you want to the car.

As you pay off the loan, you can gain equity in your car. This is when the car is worth more than the balance of the loan. If you ever decide to sell or trade-in your car, you can use that equity towards the purchase of a future vehicle.

LEASING

If you decide to lease a new car, you will still make monthly payments; however, those payments will typically be lower than a loan payment would be on the same car. This is because lease payments are only based on a portion of the car’s value. Because of this, many people can afford a nicer car with a lease than they could with a loan.

With a lease, you get to keep the car for a specified amount of time. When the term has expired, you simply return the car and can start the process over with another new model.

There are a few drawbacks to lease. One of them being mileage restrictions. If you exceed the allotted mileage in your lease contract, you will have to pay for any overage. You also cannot make any modifications to the car.

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Contact us at Reichard Buick GMC if you have any questions about financing your next vehicle. We’re here to make the process as simple as possible for you.