Financing Or Leasing: An Acura Answer
- Deciding between financing or leasing your new Acura can be challenging
- You need to factor in various personal and financial reasons before deciding between the two
- There are benefits and drawbacks to considering each option
- Creditworthiness is a crucial factor influencing your buying decision
- In the end, however, your lifestyle and financial position should dictate your choice
So, you’re hunting for a new car. You’ve done your car selection research and decided that an Acura is the best option for you. But now comes the question, how do you intend to pay for it? Should you finance or lease? Here’s a breakdown of each option to help you decide which is right for you.
Leasing a Car Explained –
Leasing a vehicle is similar to renting for a set period, typically two to four years. You have to make a down payment that is followed by monthly installments for the duration of the lease. At the end of the lease, you can either return the car or buy it outright. The two parties agree to a fixed number of miles and months during the lease term; if you go over, you may have to pay additional fees.
Advantages of Leasing –
- You’re only paying for the vehicle’s depreciation during your lease term, which is typically much less than the total purchase price.
- Monthly payments are usually lower than financing a vehicle purchase.
- You’re not responsible for vehicle maintenance and repairs.
- You can get a new vehicle every few years, so you’re always driving a newer car with the latest features.
Disadvantages of Leasing –
- You never own the vehicle outright.
- You’re liable to pay additional fees if you exceed the mileage limit or damage the vehicle.
- You’re still responsible for vehicle registration and insurance.
- You may have to pay a security deposit and the first month’s payment when you sign the lease.
Also, Read – Benefits of Buying a Brand New Car
Car Financing – Explained
With vehicle financing, you’re essentially taking out a loan to pay for the vehicle. You’re expected to make monthly payments until the vehicle is paid off, at which point you’ll own it outright. You can work with various lenders to get vehicle financing, including banks, credit unions, and the vehicle dealership.
Why Should You Opt for Car Financing? –
Several reasons are why vehicle financing may be the best option for you.
- You’ll own the vehicle outright once it’s paid off.
- You can sell the vehicle at any time.
- You’re not restricted in terms of mileage or modifications.
- You may be able to get a lower interest rate if you have a good credit score.
Why Should You Avoid Car Financing? –
However, there are also some drawbacks to vehicle financing that you should be aware of.
- It can take a long time to pay off the loan, depending on the terms of your agreement.
- Your monthly payments for a car finance deal are likely higher than if you leased the vehicle.
- You’re also liable to pay extra fees if you want to get out of the loan early.
Leasing or Financing – A Comparison
Now that you know more about each option, you can compare leasing vs. financing an Acura vehicle. Your decision to either lease or finance a vehicle rests on various factors.
- How long do you plan on keeping the vehicle?
- How much can you afford each month?
- What are your monthly driving needs?
- Do you want vehicle ownership at the end of the loan/lease agreement?
Answering these questions can help narrow down which option is best for you.
If you like to have the newest vehicle model every few years, leasing may be a better option. With a lease, you’re only responsible for making payments on the vehicle for a set period. You can turn in the keys at the end of your lease agreement and walk away.
On the other hand, financing is the way to go if you want to own your vehicle outright. You’ll make monthly payments with a loan until the vehicle is paid off. Once it’s paid off, the car is yours to keep.
While there are a lot of benefits and drawbacks for both leasing and financing, it eventually comes down to your preference and budget.
Why Does Your Creditworthiness Matter? –
Your credit score is the single factor that will weigh heavily on whether you’re approved for a loan or lease. Your credit score guides lenders, telling them how likely you are to repay a loan.
Having a high FICO score means you’re a low-risk borrower, which means you’re more likely to get approved for financing or leasing. You could also enjoy favorable terms with a stable credit score.
On the other end, a low score may mean you have to put down a larger down payment and sign up for a shorter loan term. You may even be denied altogether.
If your credit isn’t in great shape, don’t despair. There are still options available to you. You can work on building your credit by getting a secured credit card or becoming an authorized user on someone else’s account.
How to Choose the Right Lender? –
Once you know your credit score, you can start shopping for the best lending option. There are a few things to consider when choosing a lender.
- The interest rate: This is the amount you’ll pay on top of your loan principal. A higher interest rate means you’ll have to pay more in the long run.
- The loan term: This is the length of time you have to repay your loan. A longer loan usually means lower monthly payments, but you’ll pay more in interest over time.
- The down payment: This is the upfront money you’ll need to put down on your vehicle. A larger down payment means you’ll have to finance less of the vehicle’s total cost.
So, you’ve decided that a new Acura is what you need to help make your life easier. You may wonder how to finance or lease your next vehicle purchase. Luckily for you, the team at DCH Montclair Acura serving Summit, NJ, is here to help. We have years of experience helping drivers like you get into the car they want while staying within their budget. Our finance department can work with you to find a loan or lease that fits your needs and helps you reach your goals. Don’t wait any longer; apply for financing today and see why DCH Montclair Acura should be your first choice when buying or leasing an Acura.