Owning a dream car is the goal of many. It is certainly not an easy investment. Even after considering loan options, purchasing a car can still be beyond the reach of many consumers. In that case, what’s best: financing or leasing a vehicle? Let’s find out before you head to a dealership.

For this article, we will take the example of purchasing a car:

Buying a car
The particulars of buying a car include:

• When you buy a car, you are the car owner, even though the car’s cost may be very high. After you have made all the payments, you have the complete ownership of the in the case of a loan vehicle.
• You can customize your ride any which way you want. But the monthly installments are high.
• Since a customer would finance a car in most cases, as soon as he or she makes payments towards installments, the interest rate starts to decline. This means the owner has more equity towards the vehicle.
• Finally, when you purchase a car, you do not have to worry about the mileage limitations that come with a lease contract.

Leasing a car

• When you lease a car, you do not own the vehicle, but, at the same time, you can benefit from lower monthly payments.
• This also means that after all your monthly payments, you no more remain the car owner.
• The monthly down payments are lower than the installments when buying a car.
• Leasing a car binds you with a mileage cap. This means that you will have to pay extra fees for every exceeded mile if you exceed the mileage mentioned in the contract.

Weighing both options
In a nutshell, when opting to either purchase or lease a car, you must keep in mind that the rate of interest, the monthly installments, the amount you will pay over the original price, and the total stake will be higher in the case you choose to lease a car. But in case of buying a car, you may not have to give any down payment.

Which options to consider?
So, what’s best? Financing vs. leasing a vehicle is quite a subjective question. To make things simpler, you can opt for leasing a car when your purchasing power is low or want to change a car every few years. But, if you want to take the car’s complete ownership, have decent savings in the bank, and nothing would satisfy you more than sitting in a car of your own, then go for direct purchase.

Buying or leasing a car or any vehicle for that matter is a major decision that can affect your finances for the long-term. You can always consult with your bank and dealerships. So weigh in your options, analyze your bank balance, and then make an informed decision.