Choosing Between Auto Finance Leasing and Buying Part I

When going for auto finance, there are a number of procedures which a borrower can go through. Leasing and buying are the most popular of these options. Many car buyers have a common query as to what should be chosen between leasing and buying. It can get more confusing when asked for opinion as some experts say that leasing should be preferred while others give more importance to buying the vehicle. Overall, the choice of auto finance depends on whether the borrower is looking for a long term buy or wishes to switch his/her car after a couple of years.

For beginners, let’s discuss what the difference between buying and leasing is. For example, let a car’s total cost be around 20, 000 dollars. Now, when the borrower opts for buying the car, then the whole amount has to be financed. However, if the borrower is leasing the vehicle for two years, then the dealership calculates the car’s value after two years and the leaser has to finance that difference. Stating simply, if the estimated value of the car is around 12, 000 dollars after two years, then the leaser has to finance 8000 dollars now. After the end of two years, if the borrower wishes to own the car, then he/she would have to pay the current value of the car.

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