- Are monthly payments necessary?
- How do loans and leases differ?
- How are monthly lease rates determined?
- What factors determine the purchase price at the end of a lease?
- How are loan rates determined?
- Are loans available for used vehicles?
- Can extra fees and charges be financed?
- Which option makes the most sense?
Are monthly payments necessary?
Unless you're in the position to pay cash for a new or pre-owned vehicle, you'll need to establish a payment plan to obtain that vehicle. Two options exist - taking out a loan or leasing.
How do loans and leases differ?
you take out a loan, all of the money used to pay it off applies to
your eventual ownership of the vehicle. The initial down payment and
principal on the loan cover the total cost of the purchase. Lease
payments, however, apply only to the use of the vehicle. The total sum
of payments covers the vehicle's depreciation over the time you drive
it and is usually less than the outright price of the vehicle.
When is ownership transferred?
When paid in full, a loan terminates and you assume ownership. Your bank sends you the title that had been held while the loan maintained an outstanding balance. When a lease period ends you forfeit the vehicle to the lessor, unless the lessor offers to sell the vehicle afterwards. During the entire lease period the lessor maintains ownership and simply allows you to use the car. Ownership is only transferred if you chose to buy the vehicle after the lease terminates.