| By :
Dirik Hameed
Dealerships around the country advertise for buying and choosing a car or van leasing. A customer can be left confused as to which options they should go with. It is important to understand the differences between buying a car and leasing it. There are good and not so good points to each of these options that one looking for a vehicle should know. Car leasing is a good idea to consider if one is sure they will move to other towns or countries. This is because they can return the vehicle at the end of the period and walk away without further commitment. Financing of a vehicle is long term and requires one to stay on till they finish paying for it. The contract stipulation in financing says that the buyer is obligated to make payments each month regardless of the situation the are in. If they cannot pay, the car may be repossessed and all payments made prior to the date will not be returned to the buyer. When a vehicle is leased, it has to be returned at the end of the period to the dealership whereas buying a car and making payments towards full ownership give the individual equity. This is the reason most people go for buying the car; they can use the equity on it to buy other assets. Both methods require monthly payments to be made. However, car leasing payments are much lower than those of buying which gives the individual an opportunity to drive an expensive car without paying a large sum of money each month. Buying is more expensive and this is with just normal cars. One would have to pay an arm and a leg when buying a luxurious vehicle. Financing or leasing a vehicle require up front costs to be made but these differ in each. Leasing costs include the first month's payment, a security deposit that is refundable, a down payment that reduces what is owed, taxes, registration and other charges while ownership requires a down payment, taxes, registration plus other charges. If the contract for the leased car is canceled or terminated early, the individual is responsible for any outstanding charges and may even owe the dealer more than it they waited out the leasing period to end. Opting out of financing a car is not allowed in the contract but one can pay off the remaining balance plus any interest and monies that the dealer was to make at the end of the period. When an individual leases a car, they have a mileage limit that they should stay under every year.One can negotiate with the dealer and pay a higher amount each month with an increased mileage allowance.Going over the mileage limit that is not authorized gives the dealership a right to place charges on the account. A financed vehicle does not place any limit to how far one can go but frequent driving can lower the value of the car when it comes time to sell. The car lease period is mostly two to four years of age after which the car is returned to the dealership. The lessee can then choose another vehicle or buy the one they are returning. When buying a car, the car ownership shifts from the dealership to the buyer and no more monies are paid.
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