When looking to buy a car, sometimes the range of different financing and vehicle options can be difficult to parse through.
Do you want to lease or buy?
Do you want to take out a loan or buy a car outright?
Making these decisions can also be largely dependent on how flexible your income is and access to a loan with a reasonable interest rate.
So, how do you know which makes the most sense for you?
There are a few things to consider when making this decision.
The Pros of Leasing a Car
Leasing a car has quite a few financial advantages when compared to getting a loan to buy or purchasing an automobile on your own.
Monthly payments are typically lower and the down payment is little to none, which means you won’t need to set aside a lump sum of money to get your hands on the vehicle you like.
You also are not usually responsible for any of the large repair costs associated with owning a vehicle.
You’re only on the hook for routine maintenance and the auto insurance, with any large repairs covered under the vehicle warranty.
Plus, you’ll never have to pay more for the car than what it is actually worth – monthly payments are tied to an estimated depreciation rate – and you don’t have to go through the hassle of selling the car you simply return it.
The Pros of Buying a Car
You might now be thinking a lease sounds like the best deal, but not so fast.
Buying a car has plenty of benefits as well, especially if you’re interested in saving money in the long term.
Yes, a car lease will have a lower month-to-month payment, but that lease agreement exists in perpetuity.
If you decide to buy a car, you may have larger monthly payments in the short-term, but in the long-term, you own the car.
If you get a loan and then pay off the loan, you have no more monthly payments (outside of insurance) to worry about.
You’re more or less driving for free.
There’s also the benefit of being able to sell the car whenever you want to.
Ownership gives you financial flexibility, and you won’t get stuck with a car that you dislike.
You can also drive the car as far and often as you like without worrying about mileage overages that would lead to hefty fees with a car lease.
What Kind of Auto Loan Options are Available?
If you make the decision to purchase a car instead of leasing, HRCCU has two loan options that lend themselves to almost any financial situation: the more conventional vehicle loan and our GREENLight Auto Loan.
Our conventional auto loan offers low interest rates on loan terms from two to seven years, with rates varying based on the make and model of the car you want to buy.
A GREENLight Auto Loan offers monthly payments comparable to those of an automobile lease, but with the added benefit of vehicle ownership.