Getting into a new or previously enjoyed vehicle can be an overwhelming task. Among the many considerations, one of the most important will be how to actually pay for your new purchase.
“When evaluating payment options, consider the cost of borrowing based on interest rates and amortization period,” says Michael Bettencourt, managing editor at Autotrader.ca. “Your decision should also be based on factors like typical mileage, how long you plan on keeping the vehicle, and retained value ratings, so it’s important to do your research and pick the right option.”
Pros: Monthly payments can be flexible, influenced by interest rates, payment terms and the length of time chosen to pay off the cost of the vehicle. The cost of the vehicle is spread over a period of time and at the end, the vehicle is owned outright.
Cons: The fact that the vehicle will be paid off in full by the end of the borrowing term means that financing payments may be higher than leasing rates. It is possible that a vehicle could depreciate faster than it is paid off.
Pros: Leasing can be an attractive solution due to accessible payments and warranty, which allow for monthly budgeting. Leasing is appealing for people who like to trade in for a new vehicle every few years, enjoying the latest designs and updates.
Cons: Leasing is essentially a long-term rental unless you choose to buy out the vehicle at the end of the lease. You are therefore responsible for excessive mileage and any damage that may occur. – NC