Lease or Loan: A Comprehensive Car Buying Guide 

Buying a new car can and should be an exciting experience, but it's also a major financial decision you shouldn't take lightly. Luckily, there are plenty of options to make sure you're getting the best value for your investment possible. 

When you're looking for cars for sale near Goose Creek, Hendrick Automotive Group has you covered. With 97 dealership locations across the US, we're proud to be one of the premier quality vehicle retailers available. Our nationwide network of dealerships lists all of their inventories with us, so you have unlimited options to choose from. 

Before you head to one of our dealerships, you should know all of your financial options. In this guide, we'll lay out exactly what leasing vs financing a car entails so you can make the best decision for whatever your situation may be.

What Exactly is Car Leasing?

When you lease a car, you pay monthly to drive it, essentially renting the car for a short or long period of time, depending on the lease agreement. How long your car lease will last depends; typically, they last anywhere between two to five years, with the average length being 24 to 36 months. 

Lease periods work with your lifestyle and are a great option for people who don't want the commitment of buying a car outright. If you don't like driving the same car forever and love getting to enjoy the newest models every few years, leasing gives you that freedom. 

How long you lease a car will affect your monthly costs and mileage allowance, with longer leases usually qualifying for cheaper monthly payments. Compared to getting a car loan, which we'll discuss in a minute, leasing tends to be less money monthly than loan payments. 

After you enjoy all the perks of a new car without the long-term commitment, you bring it back to the dealership and can trade it in for the newest, shiniest model available. However, don't worry if you end up falling in love with the car you've leased and don't want to let it go; you have the option to buy it, allowing you to keep it forever. 

The Benefits of Leasing a Car 

• Lower monthly payments: Leasing typically costs less per month than buying the same car with a loan, saving you money.
• Lower (or no) down payment: Leasing often requires little to no money up front, unlike buying, which typically requires a significant down payment.
• Minimal maintenance and repair costs: Most leases cover the cost of maintenance and repairs, which can ensure you always have a working vehicle. While some wear and tear is expected, you might be charged for anything extreme.
• Opportunity to drive a new car frequently: Car leases tend to be much shorter than the length of auto loans, so you can drive newer cars more frequently.
• Access to the latest features: Driving new cars means you get access to the latest features and technologies. You can also qualify for a lower monthly payment while still taking advantage of the best safety and entertainment features.
• Fits short-term living arrangements: Leasing might be a good option if you live in an area for a short time, such as when you're away at college. You have a car to drive for a few months, then you can return it when you're ready to leave.

Every Requirement for Leasing a Car 

• A good credit score: You typically need a good credit score to qualify for an auto lease.
• Proof of consistent income: Lenders require proof of consistent income to qualify for a new car. You can easily prove your employment with pay stubs or tax returns.
• Proof of insurance: Leasing companies also require proof of insurance before leasing your vehicle. You must show proof of insurance covering the lease's entire purchase price.
• Proof of residence: Usually, a utility bill, lease agreement, or driver's license with your address works.
• Valid driver's license: Whether you lease a new or used car, you must provide a copy of your driver's license. Make sure your driver's license information is up to date and matches your lease application details to help speed up the process.
• Initial payment (due at signing): This may include the first month's payment, security deposit (sometimes), down payment (if required), taxes, and fees.

Is Leasing a Car the Right Choice for You?

Before we get into what getting a loan for a car entails, so you can weigh both options, consider if leasing a car would be a smart choice for you. There are plenty of benefits, and it's a great option for the budget-friendly buyer or if you don't want a long-term commitment. If that sounds like you, leasing a car may be the right choice. However, before you decide, let's review the process of getting a car loan first.

What Does Financing a Car Look Like? 

Financing a car means you are buying the vehicle with money that was loaned to you by a financial institution, like a bank or lender. You can either finance the full cost of the car or make a down payment and finance the rest, paying monthly installments, plus interest, over a predetermined period of time. 

Typically, you can spread the cost over three to seven years, depending on the deal you've made with your financial institution, so you have plenty of time to pay off the entire thing. Once the loan is paid off, the car is yours forever. 

How it Works, Step by Step:

1. You choose the car you want to buy.
2. You apply for a loan from a bank, credit union, or through the dealership.
3. If approved, the lender pays for the majority of the car.
4. You pay the lender monthly.
5. Once the loan is paid off, the car is 100% yours to keep.

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All the Advantages Of Financing Your Car

• Immediate funding: If you go to a local dealership without securing a loan beforehand, it's still possible to apply for a loan, get the funds, and drive off in a new car on the same day.
• Building equity: When you finance a car, you still build equity in your car over time. At a certain point during the loan term, you will eventually own a bigger percentage of the car's value than what you still owe.
• No mileage limits: Unlike leasing, there are no limits on how much you can drive.
• Builds credit: Making car payments on time helps build or improve your credit score.
• Freedom to customize: You can modify the car however you want, since it will always be yours.
• No wear and tear charges: When you finance a car, the vehicle is yours. You don't have to worry about getting charged for wear and tear, which can happen with a lease.
• Better long-term value: Over time, buying is usually cheaper than leasing, especially if you keep the car after it's paid off.
• Eventual ownership: With a financed car, you will eventually own the car outright.

Getting an Affordable Auto Loan

• Improve your credit: Improving your credit will help you qualify for a lower interest rate, so you'll spend less overall.
• Get preapproved: Before you head to the dealership, get a letter of pre-approval, a conditional approval from a lender that you receive prior to the finalized finance negotiation. It will give you greater negotiating power as you approach the car-buying and financing process.
• Shop around: Shop around and compare lenders to see what loan terms you can get from different banks.

Is Getting a Car Loan the Right Choice for You?

If you want a new car without having to pay for the entire thing up front, with the promise that once you've paid it off fully, it's all yours, getting a car loan is a smart choice. You get plenty of time to slowly pay the loan off, all while being able to drive your new car with no limits.

Lease vs Loan: Making the Smartest Choice For Your Lifestyle

Now that we've gone over both options, it's time to decide which one will work best for you. There are advantages to both, but when you look at them side by side, one is sure to make more sense for your lifestyle.

At Hendrick Automotive Group, we're here to make your automotive dreams come true, so when you're looking for cars for sale near Goose Creek, we're here to help with our incredible selection.

Whether you decide on leasing your new car or getting a loan from a lender, you're guaranteed to drive away feeling confident in your choice. Take your time, weigh the pros and cons, do whatever you need to do before you make your decision, because it's a big one.

Then whenever you're ready, we're here. Financial options are available to help you get behind the wheel of your dream car because you deserve it.