After you choose from the many new cars for sale in Schaumburg, you’ll have another choice to make: how to pay for your new vehicle. Of course, you may choose to pay cash, which is perfectly acceptable. However, if you’d prefer to pay for your car over time, you have two choices: leasing or financing. Here are some basic differences between these two options.
Understanding What You’re Paying For
When you finance a vehicle, you are merely dividing the initial price into a number of equal payments to be paid over a pre-determined period. With financing, you are paying for the entire value of the vehicle plus the small amount of interest that is charged.
When you lease a vehicle, you are paying for the depreciation of the car over the period that you have it in your possession. The manufacturer subtracts the amount they think the vehicle will be worth when the lease ends from the amount the car is currently worth and divides that amount into equal monthly payments that last for the term of the lease.
Understanding the End of Your Term
At the end of a finance term, you own the vehicle outright. It is yours to do with as you please, but you will have ultimately paid more since you’re paying for the entire cost of the vehicle. At the end of a lease term, you return the car to the dealership since you haven’t paid for the vehicle, but instead have paid for the depreciation of the vehicle’s value.
You can, of course, buy out your lease if you so choose, or you can instead choose to return the vehicle and enter into a new lease. This would allow you to select again from new cars for sale in Schaumburg.
Which Option Is Better?
If one option for obtaining a new vehicle was truly better than the other option, the less-desirable option probably wouldn’t even exist. The truth is, both options work well depending on your financial situation, your vehicle usage and your maintenance considerations. In any event, it’s important to consider both options before signing on the dotted line.
