If you’re looking into taking out a loan to finance your car purchase, you’ll want to be aware of the other options available to you and how they compare. As a company that leases used cars, we thought we could provide some insight into the benefits leasing has over taking out a loan. Take a look below to learn why leasing might be the right option for you.
What is a lease agreement?
A lease agreement is an arrangement in which you pay a company a monthly fee to drive a vehicle. These agreements typically span 2-5 years. At the end of a lease agreement, you typically have the option of continuing your lease or beginning a lease on a newer, nicer car if you’d like.
How does a lease compare to a loan?
Leases are easier to get.
If you have a low credit score, getting a loan can be incredibly difficult. Many lenders won’t work with you, and those who do might charge you high-interest rates because of your history. Getting a car lease is typically an easier process in which your credit history might not be as big of a factor.
Is this true for Car City? Of course! We don’t look at your credit score at all. No matter if your score is good, bad, or in-between, you’re approved.
Leases typically have fixed rates.
Loan interest rates are usually floating (also known variable or adjustable) which means they can get lower or higher depending on certain economic factors. Leases, on the other hand, typically have fixed payment plans, meaning the amount you pay each month does not change. When it comes to financial planning, knowing exactly what you’re going to have to pay is definitely a benefit.
Is this true for Car City? Yes. Our rates are fixed and account for the depreciation of the value of your leased vehicle. You’ll never have to deal with an unexpected raised rate when you work with us.
It typically costs less to begin a lease.
Loan agreements can require you to pay all kinds of upfront fees. These costs can add up quickly, causing you to spend a good chunk of your money on getting the loan instead of paying off the loan itself. Leases, however, don’t typically come with very many additional fees.
Is this true for Car City? Yes! The only fee involved in our leasing process is a down payment of $39. If you have that, you can drive off of one of our lots today.
Leases usually have lower monthly payments.
Monthly payments for a car lease are typically lower than monthly payments for a loan because lease payments are based on a car’s depreciation during the period you’re driving it, as opposed to the car’s purchase price. This can be great for your short term financial planning and success, but keep in mind that at the end of a lease agreement you will not own your vehicle.
Is this true for Car City? This one is a little tricky. Because we don’t know your specific financial situation or which of our cars interest you, it is hard to say whether or not our monthly payments will be less than a loan payment. However, you can always reach out to us for more information on a car you are interested in and we can provide you with an estimate for your lease agreement!
Forming a lease agreement generally takes less time.
The application and approval process for a loan can take some time. Some lenders claim they respond immediately after receiving your application, but it is generally safe to assume you’ll be waiting at least 3 days for approval on your loan. After that, you can generally expect to wait another 1-3 business days for the money to arrive in your account.
Is this true for Car City? No! You can walk into one of our locations and leave with a new car in under an hour! You can also get pre-approved online in a matter of seconds right now.
With a lease agreement, you can drive a new car every few years.
One of the biggest arguments that is typically brought up when discussing a lease vs. a loan is that once you pay off a loan, you own the vehicle. This is definitely a benefit, but leasing comes with its own upside: once your agreement is up, you can begin leasing a new vehicle. This means that every few years you can drive a newer, nicer vehicle that more appropriately fits your lifestyle and circumstances.
Is this true for Car City? Yes. At the end of a lease agreement, you typically have the option of returning the vehicle, buying the vehicle, or trading the vehicle in and starting a lease with a newer vehicle. We have hundreds of vehicles available in a variety of makes and models, so finding the perfect vehicle for you shouldn’t be a problem.
Learn more about leasing a vehicle from a Car City representative!
If you are ready to get started or would like to learn more about lease agreements, don’t hesitate to reach out to us. We can answer any questions you have and provide advice based on your circumstances. Schedule a visit to one of our locations, we look forward to helping you drive!