Key Takeaways:
• Leasing a car may appear cheaper in the short term, but it is generally more expensive in long-term expenses.
• The beauty of financing a car is that you own it outright, giving you the freedom to sell or trade it anytime you want. It’s also simpler than leasing a car since there aren’t as many restrictions or requirements.
• Financing may be better if you have the money for a down payment.
• Don’t exceed your car loan for more than five years.
• Do your research to compare offers from different dealerships before making a final decision.
• Lynn Layton Ford is a car dealership offering car financing services to customers in Hartselle, AL, and the surrounding areas.
Leasing or financing a new Ford vehicle can be a difficult decision. You want to ensure you get the best deal and make the right choice for your financial future. Lynn Layton Ford, serving Hartselle, AL, will help break down the differences between car leasing and financing so you may determine which option is best for you. We’ll discuss how each option works, its benefits, and when each might be the better choice. So whether you’re ready to take home your very own Ford today or still have some questions, read on to learn more!
Car Leasing
Leasing a car can be good if you want lower monthly payments and don’t plan on driving it for very long. However, you will likely have to pay more in the long run if you go over the mileage limit or decide to buy the car at the end of the lease.
Leasing is similar to renting a car on an annual basis. Instead of paying the total car price, like you would if you were buying the vehicle, you pay for the depreciation expected to happen during the lease term and interest and fees. The residual value at the end of the lease is locked in before you even drive off the lot in most automobile leases.
Most of the time, you’ll have to put down payment when leasing a car. The rest of the lease cost gets divided into manageable monthly payments with interest rates. Most leases last for two to three years, but some can be shorter or longer, depending on the agreement’s terms.
While leasing seems simple in theory, obtaining a lease is a daunting financial obligation with its specialized lingo. If you plan on leasing a vehicle, there are some key terms you need to know:
1. Capitalized Cost:
A vehicle’s capitalized cost is its purchase price. You should negotiate to get the lowest possible price, similar to when buying a car. With most automotive-sponsored lease deals, this price is set in stone; however, with other leases, haggling is essential to get the best deal.
Capitalized cost reductions refer to any savings that are taken off the total capital expenditure, for example, manufacturer lease programs.
2. Residual Value:
A residual value estimates a vehicle’s future resale value provided by a professional. A high residual value is preferable, while a low residual valuation forces you to pay a higher percentage of the car’s capitalized cost.
When a car depreciates more slowly, you can get a better lease deal on it. Vehicles that have higher residual values will usually depreciate more slowly than others.
3. Money Factor:
If leasing firms want to be transparent, they will use an interest rate when discussing lease agreements. However, instead of using this method, they rely on a number called the money factor to show the total amount of interest included in each monthly payment.
The money factor is one of the most important things to consider when leasing a car. It is like the markup rate used to calculate your monthly lease payment. A lower money factor means a lesser monthly fee, so you’ll want to negotiate for the lowest money factor possible.
To convert the money factor to a financing interest rate, multiply it by 2,400. You may either do it yourself or let an online money factor calculator handle it for you.
Car Financing
A car loan is the money you borrow from a bank, a dealership, or another lender to pay for a car. You pay regular installments on the loan until it is paid off with the applicable interest and fees.
The lender carries the title of the car you’re buying until you have paid off the loan. The instant the loan is finished, they’ll transfer the title and car to you with no issues. Most new vehicle loans come from banks, credit unions, or finance companies.
After your loan is accepted and you receive the funds, the lender sends you the funds to purchase your vehicle. You pay back what you borrowed (the “principal”) and interest over time through monthly payments.
The length of an auto loan is called its term. Terms vary from a few years to as many as seven or eight. Many experts advise shoppers not to get car loans that exceed five years; however, that limit is frequently ignored by buyers chasing affordable monthly payments. You must make the car buying and financing process work for you.
Before opting for longer-term car financing, ensure you understand all the terms and conditions associated with it and that you’re comfortable with them. Otherwise, it’s probably best to steer clear altogether. Your Ford Dealer is your best resource for car-buying advice, so be sure to ask them any questions or concerns you may have! Also, read our blog on dealership-certified pre-owned cars to find out if they are worth buying on loan than new Ford.
Need Dealership Car Financing Services in Hartselle, AL? No Problem!
Applying for car financing is easier than you think. You can get started by filling out our online application today. We will review your details and get in touch with you shortly to discuss the best options for your needs. When you work with Lynn Layton Ford, serving Hartselle, AL, you can feel confident about all the services offered.
We at our dealership understand that not everyone has a perfect credit score. That’s why we work with all types of credit histories to get you approved for an auto loan. We have a dedicated Finance Department committed to finding you the best possible car loan deal. So no matter your situation, we will work with you to find a solution that fits your needs.
Customers with outstanding loans may take advantage of low-interest vehicle loans. We can assist you in refinancing or extending your car loan. Pre-approved auto financing is just a phone call away!
Don’t miss out on browsing our new Ford inventory. Thanks for considering us as your source for car financing! Happy car hunting!
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