Brief Details about Car Lease, Car Finance and Car Loans

Brief Details about Car Lease, Car Finance and Car Loans

People in automobile industry are familiar with vehicle buying option so the terms like car finance, car lease or car loans are not alien to them. But there is s huge number of people who are not familiar with the different meaning of these terms. Let's begin with the term car lease'. It can be defined as driving on payment' which means that it is a kind of borrowing a vehicle where the user is required to pay for the time period the vehicle is used, so it can also be called vehicle on long-term rental basis. In car lease you need to pay lower payment compared to car finance or car loans as you need to pay just on a percentage of the vehicle's value but at the same time it also holds a major difference that in both car finance and car loans option you on the vehicle but in car lease the vehicle does not belong to you and do not have the authority to sell it to someone else without buying it.

The process involved in car lease work like this that the purchase value of the car is taken into consideration along with the value of the vehicle at the time when you will return it; say after two or three years. Thereafter, the future value of the vehicle is deducted from the present purchase value and this is the amount that you need to pay in installments and at the end of lease tenure you still have option either to return the car or buy it. In the end of lease term, you can return the car and get new one but here it must be noted that the vehicle does not have excessive mileage, in that case, you will have to compensate it. So, choose the option of car lease if you have good idea about mileage and you like to change your cars frequently. In this way, you can drive a new car after every two or three years. Also if you really fall in love with the car and want to buy it then it is also possible by paying the balance or if you wish, you can get it financed too. You must know that credit requirement in case of car lease is more stringent compared to buying.

In car finance, you own the car and you need to pay the entire purchase price of the vehicle along with tax which makes the vehicle costlier compared to its actual price but it is a good option for those who are willing to buy a car for a long time and want to drive it till it can be. Similar is the case with car loans where you get the entire amount for buying a car but you need to pay monthly installments to the bank. Options of car finance and car loans are ideal for those who want to buy a car for the use over a long period of time but if you are fond of driving new cars then car lease is the right choice for you.

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