Lease vs. Finance

Medicine Hat NissanLease vs. Finance

Choosing Automotive Financing or Leasing with Medicine Hat Nissan

We hear about “financing” and “leasing” a lot in the automotive world, and you’d be forgiven for thinking these are just different words for the same idea. However, there are distinctions that are worth noting; one option might come with a lot more advantages for you than the other, depending on your budget, your lifestyle, and what you want from a vehicle. Do you like having all the latest tech at your fingertips? Alternatively, are you looking for utility and a vehicle you can rely on for family vacations? Let’s get into some of the highlights of automotive financing vs. leasing and find out which is right for you!

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What is Financing a Vehicle?

When you finance a vehicle, you’re taking out a loan for its full sticker price (plus taxes) with the eventual aim of owning it. Depending on your agreement, this loan will be repaid in regular installments over an agreed period, with interest applied to the principal amount for the loan’s duration. Once the vehicle is paid off, it belongs to you.
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Tips For Securing the Best Loan

When financing a vehicle, you want to try and find a loan with a low interest rate, determine the shortest loan duration you can comfortably afford, and then kick things off with a solid down payment. This will cut out lengthy interest costs and lower your owed amount as much as possible from day one. As well, the security of a down payment can sometimes be the determining factor between you landing a loan and not if you have a weaker credit score, so it’s a good idea if you’ve got room in the budget!
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Why Leasing a Vehicle Might be Right for You

Leasing a vehicle grants you a lot more flexibility. Instead of paying for the entire sticker price, you’re only paying for its depreciation during the time you’re driving it (plus any agreed-upon interest and fees). Think of it like an extended test drive: you’ll make regular payments for a limited time period, after which you can either purchase the vehicle for its residual value or return it to the dealership.

Pros and Cons of Financing vs. Leasing

As you can see, financing and leasing each sound like convenient options for drivers, but how do you decide which is best for you? Let’s take a closer look at some of the important advantages and drawbacks of each:

Financing

Pros:

  • Once your loan is paid off, you’ll own the vehicle and won’t owe any future payments. You’ll also be free to sell it and earn back some of your investment if you choose to.
  • There are no restrictions to how many miles you can put on the odometer.
  • Since the vehicle belongs to you, you don’t have to worry about keeping it in pristine condition.

Cons:

  • As owner of the vehicle, its routine maintenance and repair costs fall to you. This can add up over time, especially once warranties expire.
  • Depending on how long your loan term is, it’s possible to end up in a position of negative equity where your car is worth less than your outstanding amount. You might also have heard this referred to as an “Upside-Down Car Loan.”
  • Vehicles don’t tend to gain value over time and some will depreciate faster than others, impacting trade-in value if you choose to sell.
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Leasing

Pros:

  • Greater flexibility lets you switch up your vehicle every few months or so, meaning you can take frequent advantage of all the latest advances in automotive tech.
  • New vehicles are still under warranty, so leasing guarantees that every part is protected without any need for additional coverage or extension costs.
  • Once your term ends, you can choose not to buy the vehicle and return it to the dealership rather than stress over trade-in values.

Cons:

  • If you’re only leasing vehicles rather than financing one, then there’ll be no end to your monthly payments. This can end up more expensive than just committing to a vehicle.
  • Leasing comes with the added pressure of having to keep your vehicle in top condition, since you’ll eventually be returning it. While normal wear and tear is expected, you could end up having to repair or replace parts of the vehicle before you return it.
  • Depending on your lifestyle and where you do most of your driving, a mileage limit might feel overly restrictive. For instance, while this likely wouldn’t be an issue for drivers who just need to commute to work in Medicine Hat and the surrounding area, it may limit those who drive long distances to visit family or who want to explore Southern Alberta to its fullest.

Finance or Lease a Vehicle with Medicine Hat Nissan

We hope this has helped take some of the stress out of financing or leasing! If you have any further questions, feel free to contact our friendly finance specialists. We can also help you value your trade if you’re wondering what your vehicle is worth; we’ll even buy it from you, regardless of whether it’s a Nissan! Looking to take out a loan instead? Fill out the form below to get pre-approved and start the exciting process of financing a new vehicle.