F&M Auto Sales understands that purchasing a vehicle can be a daunting task, and that's why we're here to help you make an informed decision. Learn all about the differences between leasing a vehicle, buying a vehicle with a car loan, and buying a vehicle with cash.
Leasing A Vehicle
Leasing a vehicle is an excellent option for those who want access to a new vehicle every few years without the commitment of ownership. When you lease a car, you essentially rent it for a set amount of time, typically two to three years. During that time, you'll make monthly payments that cover the depreciation of the vehicle, plus interest and fees. A drawback is that you'll be limited to only new models and allowed only a certain amount of mileage per year, typically around 10,000 to 12,000 miles. If you exceed that limit, you'll be charged a fee for each additional mile. At the end of the lease term, you'll have the option to buy the car if you don’t want to purchase it, you must return it and lease a new one.
Car Loans
Purchasing a vehicle with a car loan is an excellent option for individuals who plan on owning their vehicle for an extended period. When you buy and finance a new or used car, you essentially borrow money from a lender to purchase the vehicle outright. The loan term can vary from three to seven years, depending on the lender and your credit score. You can borrow from a credit union or bank, but many find it more convenient to finance at the dealership itself. F&M Auto in Detroit makes it easy to apply online and offers packages for first-time buyers, bad credit, prior repos or collections, medical debt, and more! Sometimes a down payment is required, typically around 10% of the vehicle's cost, but generally, the down payment is a smart way to reduce the overall cost of the loan and related interest. Once all the payments have been made, you will fully own the vehicle and can keep it as long as you like.
Paying Cash
Buying a vehicle with cash is an excellent option for individuals who have the money on hand to purchase a vehicle in full. When you buy a vehicle with cash, you are essentially fully paying for the car upfront and do not have to worry about making monthly payments or interest on a loan. This is not the same as a down payment, down payments are a smaller upfront cash payment of the vehicle, usually 10-20% of the vehicle’s cost. Buying a vehicle with cash tends to have more negotiating power when it comes to the final price of the vehicle.
Key Differences
Let's look at some of the key benefits of why people choose between leasing a car, buying a car with a car loan, and buying a vehicle with cash.
Monthly Payments:
Leasing a vehicle usually has lower monthly payments than buying a vehicle with a car loan. This is because you are only paying for the car's depreciation and the number of miles you drive during the lease term. On the other hand, a car loan’s monthly payments are usually higher because you are paying for the car's full price, plus interest, over a more extended period. Buying a vehicle with cash means that you do not have to worry about making monthly payments.
Ownership:
When you lease, you do not own the car, and you have to return it to the dealership at the end of the lease term. You do not have the freedom to modify the car or keep it for an extended period. When you purchase a vehicle with a car loan, you own the car and are free to modify and/or keep it for as long as you like. Buying a vehicle with cash means that you own the car outright and can keep the car for as long as you like.
Flexibility:
Leasing a car provides more flexibility in terms of switching to a new car every few years. Buying a car with a car loan provides flexibility in terms of ownership and the freedom to modify the car. Buying a vehicle with cash provides flexibility in terms of ownership and no need for monthly payments.
At F&M Auto Sales of Detroit, we're here to help you make the right decision for your unique situation and find a vehicle that meets your needs and budget. Whether you're looking to take out a car loan or buy a vehicle with cash, we're here to make the process as easy and stress-free as possible. Contact us today to learn more about our extensive inventory and financing options.
