Is it Better to Buy or Lease a Vehicle?
Do you need a new car but you have a low credit score? Maybe you have found yourself in some unexpected financial stress. Maybe your company had to close and then lay-off employees on account of a depression. You were not to blame, but how do you now demonstrate to the loans officer that you can afford your monthly installments? Your clunker just gave up the ghost unexpectedly. You got to have another car immediately and taking time to repair your credit to secure a standard bank loan is not an option. You, in reality, only have two alternatives: a) try for a bad credit car loan or b) get a bruised credit car lease.
Reduced Monthly Payments
When you lease a vehicle one of the big benefits are reduced monthly payments. Lease payments are much lower when compared to monthly loan payments. This is due to the fact that you are not fully buying the car. If you contracted to lease a $19K car for 5 years you would still owe approximately $8K as the cost of buying it out. Another good thing about a lease is minimal initial payment.
Only One Advanced Lease Payment
Leasing companies for the most part only require one up front lease installment and that can make a big difference when you are in a bind. Loans, comparatively, for bruised credit are frequently at a higher rate of interest and require a high down payment. If you are able to provide a 20% down payment, you can ask your lender to lower your rate. The best part about a loan is that you will actually own the car at term end.
Get a Problem Free Vehicle
Want a maintenance free vehicle – get a lease. Get a brand new car after every term. When your lease contract ends, you can just return the car or re-do your contract lease with the leasing company and request a different car. You can get a car with the latest features without paying as much.
No Hassle Financing When You Lease a Vehicle
You will have fewer problems financing a lease. It is a quick and simple application process. It is technically much easier to get approved for a bad or poor credit car lease than a car loan. Leasing companies usually only require proof of a steady income to make sure that you are capable of making the monthly lease installments. In Canada the basic 2016 qualification for income is around $1800 per month.
Penalties For Violations
The bad part of a lease are penalty fees for violations. Leasing companies have terms that you should comply with while you are using the car. Failing to comply with these terms and conditions would mean costing you money for the penalties. For instance, there is usually a cap or limit on the mileage you can drive every year. If you surpass that, you will pay per exceeding mile.
Attempting to free yourself from a lease can be tough
Trying to extricate yourself from a lease can be tough. If it so happens that you need to terminate your lease early, you will pay a fee. If you get into a write off type of accident and you are forced to terminate the contract, you will still be accountable to pay the penalty. The other issue is having no control of ownership. Since the car is owned by the company that leased your vehicle, you are not allowed to make changes in the vehicle configuration. As a lessee, you must strictly abide by the contract specifications of your auto leasing company.