Financing Made Easy
When leasing a car, there isn’t an option to finance because a lease payment is pretty much functioning as a finance payment. When financing does come into play is when and if you decide to buy out the vehicle at the end of the lease agreement.
There are a lot of different factors to take into account when deciding to buy out a vehicle. Take time to review the wear and tear, the mileage, the residual value, and your own personal comfort with the vehicle.
If you decide to do a buyout, you don’t necessarily need to “buy out” the entire price of the vehicle. There’s still an opportunity to finance which can pretty seamlessly replace the monthly lease payment your already making.
Shop around for financing
The first thing to do before making any decision about financing is to shop around. Financing through the leasing company usually gives them an extra financial benefit. Because of the convenience of the arrangement, getting financing and leasing in one place, they may charge you an unnecessary premium.
However, just because they are the leasing company does not necessarily mean that they don’t have a good deal to offer you. The point is to shop around before making a decision just because the leasing company is making a convenient offer.
Some financing companies provide lease-buyout loans that work just like a refinancing loan. So if you’re seriously considering a buyout and you know you want to finance, simply make yourself aware of other options before locking in a deal.
Don’t Make This Common Mistake
One of the most common, and costly, mistakes people make when buying a new car is forgetting to include the cost of financing. We tend to think of financing as just a method of paying whatever the full price is, but with that service comes a cost. That’s why shopping around is so important. You may be able to find financing companies that have cheaper costs and deals than others by simply doing some research.
One of the biggest mistakes people make when buying a new car is forgetting to include the cost of auto financing in the total price.
For example, if you’re buying a new Honda Civic, the difference between “sticker price” and the dealer’s invoice price (what the dealer paid for the car) is about $1,500. If you negotiate well, you could save $1,000 or more on the price of the car.
If you then finance the car for four years at six percent with nothing down, you’ll pay over $2,000 in interest. Financing the car for three years at four percent with a $1,500 down payment, however, can save you over $1,000.
Just like all the advice we give you here at carvoy.com, coming to the best conclusion requires some homework. When it comes to negotiating deals and making financing decisions it’s always important to examine your own case in a unique light.
But if this proves to be difficult, you can always reach out to us. We are experts and would be happy to guide you along the buy out process if that’s a decision you are considering.