Here is a rundown of both vehicle finance options to consider:

The Purchase

Paying cash for a new vehicle will almost always be the cheapest option; however, if it comes down to a choice between financing and leasing a new car, financing usually wins out. You be paying more each month on an auto loan but in the end, a lease will usually cost you more. You can typically secure financing for up to 72 months. The vehicle you purchase at the end of the loan will be yours to keep and do with as you wish. You may even want to trade it in on your next new car. There are no driving limitations with a purchase as there are with a lease. You are responsible for the cost of maintenance, repair problems that are not covered by a warranty, and you will likely want to keep your vehicle for as long as possible after paying off the loan.

The Lease

When you agree to lease a vehicle, it will cost you more money than a purchase would over time but it can also be an easier financial option if monthly costs are a concern. You’ll likely have a smaller upfront cash requirement and smaller monthly payments through a vehicle lease. The bonus part of a lease is that you can generally trade up to a newer vehicle as time goes on. Those who may not be able to afford a more luxury vehicle if they were to purchase, may find that a lease allows some more room to upgrade to a better make and model of car. The cons of a lease may mean different things to different drivers. A lease does have its limitations, such as mileage allowances for a year and the responsibility to keep the vehicle in excellent condition. Damages to the vehicle including tears or stains can cost additional money per the lease agreement.

If you are in a position to lease or finance, you need to consider all aspects of what each deal brings to the table when it comes to terms and conditions as well as the total cost of the monthly payments. There is no right answer and the numbers generally speak for themselves when compared to a family budget. You also will need to consider the incidental costs of any new vehicle in your budget equation. A more expensive leased vehicle may require higher insurance premiums. An upgrade in vehicle size may cost you more money in fuel and maintenance. Whatever you decide to do, make sure it makes the most financial sense for your budget and your transportation needs. Getting out from under a lease or a loan can be very difficult, very expensive, and can damage your credit for future use.