It’s something we all struggled with: getting from point A to point B in the least amount of time possible. There’s only one way to make sure that happens and that’s to drive a car. If you have finally decided to get that dream car you have always wanted, but don’t have the full cash for it, there are two ways of going ahead. First is through financing, and the other is taking it on a lease. Herein, we look at the differences in car finance vs. car lease.

1. Car financing
Financing is a means through which you can buy a car even if you don’t have sufficient money. You can make a down payment and take the car home. The rest of the money would be funded by the car financing company. Every month, you need to make a payment to the car financing company to repay the amount. It includes interest paid to the financing firm. This payment continues for a pre-agreed duration as specified in the contract. Once you finish making the payment, the car ownership is transferred to you.

2. Car lease
Leasing any product involves taking it on hire. The company that leases you the car buys the vehicle and offers it to you on a monthly rent. S, when you take a car on the lease, you are taking it on rent from a leasing company for a particular duration. A contract is signed between the lessor and lessee, explaining the rent to be paid, duration, and other terms. Once the contract period is over, you need to return the car to the leasing firm or buy it from them at a pre-agreed price.

3. The differences
There are many differences when it comes to car finance vs. car lease. The following explains these differences to help you decide which option is more convenient for you.

• Ownership
  In the case of the financing, the car is yours, but the lien will be in favor of the financing firm. It will remain until you clear off your debts. The moment you repay the amount that was financed along with the interest, you will become the sole owner of the car. In leasing, ownership of the car remains with the leasing company. You are never the owner of the car. At the end of the lease period, you need to return the car, or you can choose to buy it back from the leasing company, which would work to be more expensive than if you financed it.
• Duration
  In financing, the duration of the loan is usually for around 60 months. It can even extend up to 72 months or be lesser. It is the duration within which the loan has to be repaid. In leasing, the duration is usually for 24 to 48 months. It is shorter in duration as you would want to have the option of changing your car after a year or two.
• Affordability
  A lease is more affordable as you only need to make a monthly payment with not many extra costs. Financing, on the other hand, requires a down payment with more expensive monthly payments. Leasing allows you to get a higher-end car for a low monthly rental.

The differences between car finance vs. car lease would help you understand more about these two options to get a car. Depending on your needs, you can choose either of the two to get the new car of your choice.