Looking for a New Vehicle?
The decision between buying or leasing a new or pre-owned vehicle in Calgary can be confusing for new customers. Buying a vehicle is as it sounds – paying for the entire cost of the vehicle, while leasing means that you only pay for the portion of the vehicle’s cost that covers the time you’ll be driving it. To help you figure out which option works best for you, we at Country Hills Nissan have provided a helpful guide. For any additional assistance, don’t hesitate to reach out to our finance department or contact Country Hills Nissan online today!
What is Vehicle Financing?
Financing a vehicle means Financing a car means borrowing money to purchase a vehicle through a car or auto loan. This enables you to spread out the cost of a new car over several years, and interest on car loans is typically calculated using simple interest, meaning it will accumulate over time like compound interest.
On average, a car loan lasts about 68 months, though 72-month loans are becoming more and more common. During this period, you are expected to make monthly loan payments, including both the principal amount and added interest. Most auto loans are amortized, which means that your early payments will primarily consist of interest rather than principal payments.
Your monthly payments when financing a vehicle will typically be higher than lease payments, since they cover the entire cost of the vehicle plus interest. Once you’ve reached the end of the loan term, however, you’ll own the car in full with no more required payments. In addition, you’ll also be able to build equity, and properly maintaining your vehicle can positively affect its residual value, a huge plus for future trade-ins or sales.
What is Vehicle Leasing?
When you lease a vehicle, you are essentially renting it for a set period, usually between 2-4 years, during which time you’re expected to make monthly payments. This gives you the flexibility to upgrade to a new model every few years without paying the full purchase price.
When considering a lease, there are a few terms to keep in mind:
• Lease term refers to the length of the lease agreement between you and the dealership.
• Down payments are the initial amount that is due upfront when starting a lease. Opting for a larger down payment can help to reduce your subsequent monthly payments.
• Your security deposit is a refundable fee that you pay at the start of the lease to protect the leasing company against any potential vehicular damage or missed payments. This deposit is refunded if the vehicle is in good condition and the lease terms are met.
• Your recurring monthly payment is determined by factors such as the vehicle’s price, the duration of the lease, and the mileage limits outlined in your lease contract.
• The projected value of your vehicle at the end of the lease term is referred to as residual value. A higher residual value often leads to lower monthly payments, since you’re paying for depreciation rather than the full vehicle price.
Comparing Monthly Costs
Make sure that you’re getting the best value out of your car by filling out our finance application. This handy tool lets you estimate your potential monthly payments and get a clearer picture of your budget.
Leasing is usually the more affordable option at first. While leasing will allow you to drive a new car every few years, however, it doesn’t let you build equity on the vehicle, and you have to return it at the end of the lease term unless you decide to purchase it.
In contrast, financing often includes higher monthly payments, but you’re free to keep, modify, or sell the vehicle as you see fit once the loan is paid off. If you plan to own your vehicle for the long run, buying can be the more cost-effective option.
End-of-Term and Early Termination
A lot of our customers who finance their vehicles choose to buy them outright once the loan is paid off, as it affords them full ownership. If you’re leasing, you’ve got several other options to choose from once your lease term ends. You can return the vehicle, purchase it in full, or lease a new vehicle. If you choose to return the vehicle, note that you may have to pay for any end-of-lease charges, including fees for excess wear, tear, or mileage.
Ending a least early requires advanced notice, which might result in significant penalties ranging from the full remaining lease balance to a fixed fee. Failing to pay these penalties can lead to them being sent to collections, which can have a negative impact on your credit score for up to 7 years.
Visit Country Hills Nissan Today
To make choosing between financing and leasing easy, let your friends at Country Hills Nissan lend a hand! Whether you’re after exciting new models like the Nissan Kicks or Nissan Sentra, our finance team is ready to help you find the perfect option to suit your lifestyle and budget. Contact us online today or head to our location at 2451 Country Hills Boulevard to learn more!