Determining how you want to pay for a new or new-to-you car depends on several factors, including your credit score, the type of vehicle you're purchasing and how long you plan to keep the car. Each method of payment has its advantages, but one option may clearly be the best for you.
Financing
If you would like to purchase a vehicle, but don't have the funds to pay for it all at once, financing is a good option. The contracts are longer than leases, but unlike a lease, you own the car once your loan is paid off. Additionally, there are no mileage restrictions like there are with leases, which include additional charges for drivers who go over their annual limit.
What you should consider before financing: Selling a car that you are financing is not impossible, but it can be complicated and usually requires the involvement of your creditor. You must also consider that the shorter the loan period is, the more you'll pay per month.
Leasing
When you lease, you are not paying to own, just to "rent," as you would do with an apartment, so it's an ideal option for drivers who like to trade in for a new vehicle every few years. Some perks that come along with this include having access to the latest auto features and constant warranty coverage (in most cases). In addition, lease payments tend to be lower than finance payments.
What you should consider before leasing: If you are the type who likes to own one car for a long period of time, and have "something to show" for the payments you've made over the years, financing may be a better option for you. Also, if you lease a car and then decide that you want to keep it when your agreement is up, it will cost you more.
If you are interested in financing or leasing a car at our dealership, please take a moment to fill out our confidential finance form and find out if you are pre-approved for credit.
Paying Cash
This is the least common method of payment because many people simply do not have the money to pay everything upfront, and even those who do may not want to spend all of their savings on one big-ticket item. However, if you do have the money, there are perks that come along with paying off a car right from the get-go. The most obvious is that you won't have to make monthly payments. Additionally, you'll have the freedom to sell your car whenever you want to whoever you'd like.
What you should consider before paying cash: It is not wise to clear out all of your savings to pay for one item, so if you choose to pay for a vehicle with cash, make sure you still have enough money left over for emergencies. Also, if you are trying to build credit, financing or leasing may be a better option. Making on-time, monthly payments for a car is a great way to build up your credit score.
