The process of buying a car is tricky albeit an important one. A big expense like buying a car is not a decision that can be made overnight. Moreover, the next question that arises is the question of paying for the purchase. There are two options: You can either pay for the car outright or opt to lease it.

Whether you choose to finance or lease it, you will want to consider the pros and cons of financing vs. leasing a vehicle. To help you make the right choice, here are some of the major pros and cons of each of these methods of paying for your automobile so that you can make an informed choice.

Financing a vehicle
When you opt to finance your car, you are technically paying to own it. There are many options for car financing. Let’s look at the pros and cons of financing a vehicle.

Pros of financing

• You own the vehicle so you can sell it again should the need for finance arise.
• You can opt to use your savings to pay for a part of the car and minimize the amount paid in interest.
• A good credit score will see you get a great deal on your car.
• You can use and modify the vehicle as you please.
• You get multiple options of financing including a personal loan, credit card, and more.

Cons of financing

• The availability of more finance can cause you to overstep and take out more money than you can afford to pay back.
• Monthly payments are often costlier than that of a lease.

Leasing a vehicle
When you opt to lease your car, you are technically paying to rent it. A lease can be closed-end or open-end. Let’s look at the pros and cons of leasing a vehicle.

Pros of leasing

• Lower monthly payments when compared to a car loan.
• A closed-end lease does not charge you any additional amount when you return the vehicle.
• With an open-end lease, you may get a refund if the car value is more than what was estimated when the contract has ended.

Cons of leasing

• You need a high credit score that usually exceeds 700 to lease a new car.
• You are paying to simply rent the car for a few months and miles; thus, you cannot build any equity from the time that you have it in your possession.
• With an open-end lease, you may end up paying more when you return the vehicle in case the car value is less than what was estimated at the start.
• Instead of a sales tax, you would pay a use tax.

Carefully consider all the pros and cons of financing vs. leasing a vehicle and make the right choice as per your financial needs.