Finance Vs. Lease Car: What’s Your Best Option?

Can’t wait to buy the car of your dreams? But have you considered everything there is to know about purchasing it? And now are you struggling to make your final call?
Well if any of these questions make you answer “yes”, then this article will guide you through everything you need to know about.
While buying a brand new car can be very alluring if you have the budget, it can also get quite overwhelming. Closing up to a hasty decision can cost you highly down the road (both literally and hypothetically).

For people with lower budgets, leasing a car should be a good option. A lower monthly rate for using a car would seem more ideal to many. The longer the lease, the lesser will be the monthly payment. And if you struggle to pay for the monthly payment, you could always consider car lease takeover.
Car lease takeover is an affordable way to get out of a car lease, or an affordable way to get a car by taking over the lease from a person who wants to end his lease agreement. It has many advantages that are stated below.

Buying or financing a car would mean requesting a loan from the bank, which you would be required to pay back with the interest rate included. The upside of buying cars is that you could make any kinds of modifications you like. But with passing years, the value of your cars will be depreciated, giving you from little to no resale value, in the end.

Let’s get down to the specifics of buying and leasing a car.

FINANCING A CAR

Upsides of financing a car

Above all, you have the ownership to your car and there will be no exemptions put forward against you. Given that you have enough cash to buy it outright. If you finance your car, you will eventually own it.

As detailed above, you can customize your car according to your wishes. And of course, you will not be tied to any kinds of lease payments. You could drive any number of kilometers, not in fear of crossing the limit that comes with leasing.

Downsides of financing a car

Financing a car does not mean that it is free of any discomforts. Like everything else, it also has a set of pros and cons.
Owning a car could mean a higher monthly payment. This is in regard to the loan you’ll be paying back.

Possible unexpected repair costs post the warranty period come as natural as bees to flowers.
Most importantly, your car would most definitely lose its resale value in the coming years.

LEASING A CAR

Upside of leasing a car

If you don’t have enough money to buy a car, then leasing one would be a good option for you. Leasing a car comes with lesser monthly payments than financing one. Usually there are no down payments for leasing a car, but even if some leasing companies require it, you would be able to afford it, which would mean that you could drive a better car than the one you would purchase.

You wouldn’t have to worry about repair costs and the resale value as it would be covered by the financier.
According to a study, the real value of financing a car is slightly higher than leasing.
You could on the other hand relatively avoid a huge lease payment by looking for a person who wants to get out of a lease agreement. This is called car lease takeover or care lease transfer. It is ideal for the seller to quickly get out of a car lease who is no longer able to cope with the payments, with minimal hassle. It also benefits the buyer by helping them avoid most of the lease payments, given the seller went through the initial payments.

Downside of leasing a car

Even though you don’t exactly own the leased car, but it doesn’t mean that you will be exempted from any insurance payments. You will be charged additionally for wear and tear. And since you do not own the car, you cannot make any modifications to it. Also, you can drive only a limited number of miles since going overboard will cost you extra.

For a better financial future, you must have good knowledge over the above stated entities.

How to calculate a car lease payment

You may need to know how the car lease payment is calculated before you make a decision to finance, lease or lease take over a car.

When you lease a car, you pay to use a vehicle for a specific period of time. A leasing company buys the vehicle from your dealer before leasing it out the client.

There are some terms that we need to go through them before the calculation is made:

• MSRP- also known as sticker price.
• Lease Term: Usually between 36 and 60 months. We recommend 48 months for a car lease.
• The money factor: Divide interest rate by 2,400.
• Residual value is the lease-end resale value of the car. Usually the residual value for a car lease is between 45 to 60 percent for 48 months.
• Car Lease Fee: This fee includes registration, document fees, etc..

Example
Let’s assume we are going to lease a car and the full price is $35,000, so
# MSRP ( sticker price): $35,000
# Lease Term: 48 months
# Money factor: 0.00042 ( Interest Rate / 2,400 = 1.00 / 2,400)
# Residual value: $15,750 ( lease-end resale value)
# Depreciation Cost: $19,250 ( = MSRP – Residual value)
# Base Payment: $401.04 ( Depreciation Cost / Lease Term)
# Rent Fee: $21.32 ( (MSRP + Residual value )* Money factor)
# Lease Payment before Tax: $422.36 ( Base Payment + Rent Fee)
# Lease Payment after Tax: $477.27 ( For example in Ontario)

We generally recommend the highest possible residual value and lowest possible money factor.
Even if you take over a car lease, it is important to find out the residual value in the agreement

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Who We are?

LeaseFort.ca is a startup launched in Toronto in September 2016. LeaseFort is for connecting people who want to get out of their leases with people who want to take over a lease. We are a startup team specialized in IT. We are trying to use technology to make life easier for people who want to get out of their leases or want to take over a lease.
Listing Car Lease is FREE

You can list your first car FREE and there is no charge for listing your first car lease. We charge $19.99 for any extra car that you want to list in the LeaseFort.ca.
Moreover, you can purchase ‘Top Ad’ feature ( $9.99 ) to have your ad shown in the ‘Top Ad’ section and regular listing pages. It will increase your chance to find someone to take over your car lease.