While purchasing a vehicle many significant queries come to mind. Of these, an important one that needs to be answered is whether you will finance or lease the vehicle? In this article, we shall discuss the pros and cons of financing vs. leasing a vehicle which could be of help to you.

Pros and Cons of Financing vs. Leasing a Vehicle
Before we talk about the pros and cons of financing vs. leasing a vehicle let us understand the main difference between financing and leasing. In financing, money is borrowed as a loan. After the loan has been paid through monthly installments the vehicle becomes yours. In leasing, money is paid for monthly usage and the vehicle is repossessed after the expiry of the lease tenure. To help you with your payment plan here are the pros and cons of financing vs. leasing a vehicle.

The pros of financing a vehicle

• Ultimate Ownership
  When your loan has been fully paid off the vehicle will be yours. Then you can sell it if you want to.
• Freedom to Customize
  You can modify your vehicle according to personal preference when you are financing a vehicle.
• No Mileage Limit
  You can drive long distances without worrying about the mileage allowance and penalty if you exceed the limit.
• No End-of-lease Charges
  No need to pay any wear and tear charges after your loan has been repaid.

The cons of financing a vehicle

• Higher payments
  Your monthly car loan payment will be more than a lease as you have to pay the full price of the vehicle in 4 to 5 years. Financing a vehicle also involves a large amount of down payment. 
• Post-warranty Repair Costs
  You have to bear the post-warranty repair costs and maintenance expenses when required.
• Depreciation
  A new vehicle diminishes in value over time. This is quite a financial burden.
• Unpredictable Resale Value
  Too much mileage, overuse, and damage may affect the resale value of the vehicle.

The pros of leasing a vehicle

• Lower Payments
  The monthly lease payments are lower than the monthly loan payments for the same vehicle. Also, leasing a vehicle involves no or low down payment.
• Better Warranty Coverage
  No need to fret about major maintenance and repairs because when you are leasing a vehicle it remains covered by the leasing company.
• Opportunities for New Leases
  When the lease expires after 2-4 years you can sign a fresh lease for a new vehicle.

The cons of leasing a vehicle

• Mileage Limits
  The mileage allowance for a leased vehicle is limited, hence on exceeding it, one has to pay additional charges. 
• Other Rules and Penalties
  Down payment, monthly lease payments license fees, security deposits, late payment penalties, damage charges, early termination fees if you break the contract, etc. are some charges you would have to pay.

These are the pros and cons of financing vs. leasing a vehicle which should help you make the right decision.