Owning a car sounds easy; you just have to select the right model and make, and all your transportation needs can be taken care of for years to come. However, the difficult part begins when you have to decide how to pay for the car. When paying for a car, you can pay the whole amount at once, but the problem with this option is that everyone does not have a lot of cash with them.

This makes it important to know about financing vs. leasing a vehicle and be sure of which option you want to go ahead with, as each comes with its own advantages and disadvantages. Here are the pros and cons of financing vs. leasing a vehicle to help you make a sound decision:

Leasing a car : When it comes to financing vs. leasing a vehicle, leasing is the perfect option if you wish to reduce your overall monthly expenses. Typically, leasing a car can be 60% cheaper as compared to the monthly repayments required for financing methods like car loans.

Pros

• You will most likely have lower monthly payments as compared to financing
• You can opt for using a new car around every two or three years
• You always have the protection of a warranty
• You do not need to worry about the hassles of trading or selling the car in the future

Cons

• You need to have a reliable and stable income source
• You can only drive a fixed amount of miles during your term of the lease
• You have to pay special attention to the maintenance aspects of the car even though you do not own it
• You have to buy gap insurance in most cases when leasing a car
• You will most likely have to pay a higher amount in the long-term as compared to purchasing or financing a car
• The requirement of a stable source of income to make monthly payments during your lease term gives leasing a disadvantage in the financing vs. leasing a vehicle debate

Financing a car
In financing vs. leasing a vehicle, financing is a better option if you plan to use the car for a long time and have proper car insurance.

Pros

• Eventually, you will have total ownership of your car
• You do not have to worry about a limit on the number of miles you can drive
• You have the freedom of customizing your vehicle
• You can increase the trade-in or resale value of the car over time
• You will experience a lesser term cost as you can use the car for years if not a lifetime
• There is a zero risk of lease-end charges

Cons

• You will have to pay higher monthly payments than in the case of a lease
• You will have to undertake the repair cost after the warranty has expired
• You will have to trade or sell your car completely on your own