Leasing and financing are two different methods to pay for a vehicle. But what exactly do these methods entail? Both options have pros and cons that you must consider, and the best option can differ for each car buyer and their situation. Continue reading with the experts at Westminster Toyota as we discuss leasing versus financing your vehicle.
Leasing
Leasing a vehicle is similar to renting it for a long-term agreement. You use the car for a specific period (typically between 24 and 60 months) and pay a monthly fee. This payment is generally lower compared to financing the vehicle and you’ll also be making a smaller down payment. This option is great if you’re dealing with life changes like a new job or expanding your family, as it allows you to access the latest vehicles with the best features on the market. The con is that you won’t own the vehicle and will need to return the vehicle when the lease period is up.
Kilometre Allowance
Leasing a vehicle requires you to pick from three kilometre allowances, which specify the total kilometres you can drive the vehicle during your agreement. Choose from the 16,000km, 20,000km and 24,000km options. If you’re unsure how many kilometres you’ll drive, you can purchase extra.
Verdict
Leasing is a good option if you want lower monthly payments, like driving a newer car more often and would like a short-term commitment.
Financing
Financing a vehicle involves taking out a loan to purchase the vehicle. You pay this loan off through monthly payments with interest. With Toyota’s flexible term options up to 84 months, how fast you pay is up to you. You can choose to make smaller payments over a longer period of time. Or you can opt to make larger payments towards your vehicle through a shorter term. While financing a vehicle generally requires a larger monthly payment compared to leasing, you will own the vehicle outright when the term comes to an end. You also don’t have to stick to a kilometre allowance, and can drive the vehicle as much as you want.
Simple Interest Financing
Toyota offers simple interest financing to calculate interest charges. This consumer-friendly method means payments received one day early will see you credited for a day’s interest. Payments received one day late will cause you to pay an extra day’s interest.
Verdict
You should opt to finance your vehicle if you plan to put a lot of mileage on it, want to own it outright, or plan on using it for commercial purposes.
Shop for Your Next Vehicle at Westminster Toyota
Leasing and financing are both great options to pay for your vehicle. The one you choose depends on your situation and what you’re looking for. Contact the finance experts at Westminster Toyota to talk about the payment option that works best for you.