Financing a car with a leasing

Those who want to purchase a vehicle may have many doubts about what they really should do. Financing a car or leasing? There are two options, among others available on the market. The right choice depends on numerous factors and is closely related to what the consumer really wants.

Before making the decision for one modality or another, it is important to know the aspects of each one of them. By becoming aware of the advantages and disadvantages, the consumer is able to analyze within his reality which of the two modalities will be his best option

Vehicle financing

To finance a vehicle, it is possible to take out a direct loan or resort to financing from the dealership.

When you choose to make a direct loan, it means that the consumer has gone to a credit union or a bank, or a finance company and made a loan. When requesting the loan, the consumer is agreeing to pay the amount financed with the addition of a financial charge during a certain period of time. The time agreed to repay the loan is established between the consumer and the financial institution. When buying the car, the consumer will use this loan to pay for it.

By taking out the direct loan, the consumer is able to obtain pre-approval for the financing even before buying the new car. Therefore, the consumer is already aware of all the terms, the annual APR fee, and for how many months he will pay, in addition, he will already know the maximum amount he can request from the financial institution. In addition, it is possible to know the value of the APR, which is the annual cost of the credit. It’s important to note that these fees are factored in to several variables, including your credit rating, as well as the requested amount and duration of the loan.

Another way is also to use a dealer comparison shop. When you have pre-approved credit, you can ask dealers for a written price on a car you might be interested in. Thus, with the price of the vehicle in hand, it is easier for the consumer to negotiate and identify the best purchase and financing opportunity without wasting time at the dealership.

At the dealership, consumers can find credit options

Dealership resellers generally have relationships with various financial institutions, such as banks and credit unions. As such, it may be possible for him to present the consumer with a wide variety of financing options. However, it is important to remember that the reseller makes profits with these financial operations, and it is not always the best option. However, it is important to ask for a demonstration of the most varied credit options so that the consumer can choose the one that suits him best.

Another detail is that some dealerships may offer special programs. These special programs are often initiatives of car manufacturers, who may decide to offer on a particular vehicle line. In some cases it is possible to purchase cars with practically zero interest rates. However, some special conditions may have requirements such as requiring a higher credit rating or even a higher down payment than that eventually practiced by most financial institutions.Faça uma comparação entre as opções de financiamento

To make a good deal, it is very important to pay attention to the financing options and evaluate which one is the best. When comparing, don’t just pay attention to the monthly payment amount, the total negotiated value of the car, APR and loan duration must be taken into account.

It is possible that some financial institutions offer long-term financing such as 72 or even 84 months. It is common for these long-term loans to reduce the amount of monthly installments, however, rates are usually higher and this can result in a higher cost of financing.

It is important to bear in mind that the longer the duration of the loan, the greater the final amount paid on the acquired asset. In addition, another factor to be observed is that vehicles generally lose value quickly, which greatly depreciates the amount being invested.

Another factor is that some resellers may suggest that the consumer chooses to purchase credit insurance, if the consumer dies or becomes incapacitated, the financing is paid off. But, very calmly, analyze carefully if it is really necessary and the cost involved in this operation.

Remember to ask the seller

Find out if the vehicle’s complements are already included in the value, or if you add the complete ones, there will be an increase in the value of the vehicle. If the complements represent an extra expense, the reseller can only inform the consumer in advance.

Ask the seller if there is any incentive from the manufacturer. These incentives can make vehicle financing cheaper. Also, inquire in advance if you qualify for special dealership promotions.

APR annual fee

Another important factor is negotiating the annual APR rate and payment terms with the dealership.

Rent a car

Another modality for acquiring a car is known as leasing. Leasing is completely different from buying. The amounts paid monthly refer to the rental of the vehicle, and for this reason they are generally lower than those charged in the monthly installments of a financing when buying a car.

In other words, when resorting to leasing, you are paying to drive the car and not to buy it. In this way, the consumer is paying for the vehicle’s depreciation or loss of value. During the rental period, the consumer, in addition to paying the rent, is responsible for taxes and fees. If the leasing contract signed between the consumer and the institution allows it, it is possible to buy the vehicle at the end of the lease by paying a pre-defined fee with the company.

But how do you know if leasing is the best option for your consumer profile? There are some features that can help you identify if this is the best option for you. Typically, leasing contracts adopt an annual mileage limit of 15,000 or even less. When the consumer exceeds this limit he is subject to extra payments. This happens because the greater the mileage, the lower the value of the vehicle. It is as if the consumer were contributing to a faster depreciation of the vehicle.

It is important to pay attention to the lease terms. When renting a car under the leasing contract, the consumer becomes responsible for all possible and excessive wear and tear on the vehicle, in addition to being responsible for any lost or damaged equipment.

In addition, the consumer becomes responsible for maintaining the vehicle in accordance with everything in the contract. Therefore, reading the contract before closing the deal is extremely important in order not to fall into “traps”.

Some contracts may provide for the payment of an extra fee in case of early breach of contract by the customer.

Make a budget table

Before taking any decision it is important to review your accounts. Are you really prepared to make another commitment? Will you be able to honor the commitments you already have and sign another one? Also, remember to have a small emergency reserve, as vehicles can provide unpleasant surprises such as unexpected expenses with maintenance or repairs at a mechanic.

Now that you have all the information you need, do some careful analysis and choose the best option.