When you decide to buy a car there are mainly three options you can use to do so: Paying in cash (if you happen to have the money), requesting a Car Loan to finance the purchase of the car or, you could undertake a leasing program. Each of these options has its pros and cons that will be analyzed in this article.
Paying In Cash
This seems to be the best and cheapest way for buying a car. Of course, not everybody has the money needed to pay the car in full without any source of finance. Besides, the money could probably be used for other purposes. Buying without finance may be the cheapest way but it is probably not a practical way to go.
Car Loans And Bad Credit Car Loans
For those who do not have the cash and especially for those who do not have good credit, Car Loans seem to be the way to go. Car loans can be easily qualified because they are secured loans with the car guaranteeing the loan. There always exists the risk of repossession if the borrower fails to make the monthly payments. However, collateral is the main reason why there are so many Bad Credit Car Loans. Secured loans imply a lower risk for the lender, they can be easily obtained by people with bad credit and the monthly payments are affordable enough.
Leasing Programs
Leasing is a rather new system for acquiring a car. When you lease a car you are actually renting the car, but after a considerable amount of time renting the car, the monthly installments you have been paying can be considered loan payments and you will be able to acquire the car by paying a residual amount of money to get ownership.
That being said, you can choose to buy the car or not. When the time comes some leasing companies offer you different options: You can pay the small residual amount and keep the car to yourself, you can pay a higher amount and get a new car or you could continue leasing a new car till you reach the time when you will be able to get the car by paying a small residual amount.
Leasing is probably the most expensive system if you consider the overall cost of the purchase. However, the monthly payments are much lower than that of a bad credit car loan and it is probably the most practical system to possess a vehicle.
Leasing comes with other benefits: The car is warranted for any failure and will be fixed or replaced during the leasing period. It is also insured against any risk due to the fact that the owner of the car is the leasing company and thus the company would be held responsible if any accident may occur. Since the company wants to make sure the car stays in good conditions, you will be provided with cheap maintenance from company personnel.
Summing Up
After considering all the available sources of finance, leasing may not be the cheapest way to go, but you should consider the option since it provides low monthly payments and low costs. If you are not so keen on actually owning the car as long as you are able to use it, leasing is a great choice.
