Buying a vehicle with a car loan is pretty straightforward. You borrow money from a lender and make monthly payments for a certain number of years. You pay both interest and principle. When you paid off the entire loan, the car is all yours. Recently, however, leading a car has become more mainstream – but is it right for you? Let’s look at why it’s good, and why it’s bad.
Many people find it appealing to lease because monthly payments are usually lower because you’re not paying back principal. Here are some advantages to leasing a car:
While leasing may seem attractive, there are some disadvantages:
If you are wanting to drive a new car every couple of years, taking out a long-term loan and trading it in early is a sure way to have paid so much more in finance charges compared with principal you’d pay with leasing. If you’re looking for low monthly payments and to drive a new car every few years with little hassle, leasing might be a good idea for you.
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