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Buying a car is one of the most important purchases we make in our lives. It requires a lot of research, trial and error, and financial planning. Before going any further, weigh up the pros and cons of each option: financing, leasing or buying a car outright. Then, what will be the impact on your auto insurance? Before making a decision, consider the differences between financing and leasing a car, as each option has its advantages and disadvantages. That’s what we explain in this article.
If you’re looking for a new car and can’t afford to buy it outright, you can also choose financing (auto loan) or leasing (lease agreement).
Leasing involves renting a car over a long period, making monthly payments until the end of the lease. A leasing contract generally lasts two to four years (24 to 48 months), after which you return the car. At the end of the lease period, you may be able to purchase or finance the vehicle, depending on the residual value and your needs at that time.
Another option is financing (auto loan) the car. In a way, it’s comparable to a mortgage, i.e. financing for the purchase of a home. Here too, you make monthly payments, but the car belongs to you once the loan is fully paid off. Although you are responsible for repairs and maintenance, you will no longer have monthly payments, which can make up for it.
Here are the main benefits of leasing a car:
Here are the main drawbacks of leasing a car:
Here are the main benefits of financing a car:
Here are the main drawbacks of financing a car:
When it comes to insurance, there is no difference between financing or leasing a car, so your car insurance premiums will not be affected. However, insurance companies base your premiums on specific criteria, such as your choice of car, your age, your gender, your place of residence, your driving history and so on. To get a better price, you can contact an insurance broker like ClicAssure, who has access to several insurance companies and personalized offers.
If you have decided to finance or lease your car, be aware that the lender will be named on your insurance policy.
In general, if the car is involved in an accident, your insurer will first pay the amount owed to the lender (financing or leasing). If the value of the car is higher than the amount owed, you will receive the difference. GAP insurance covers the costs if the car’s value is less than the remaining balance owed.
In summary, financing or leasing a car has its pros and cons and generally has no impact on your car insurance premiums. Ultimately, it’s up to you to make the choice that best suits your personal and financial situation. Que vous choisissiez de financer ou de louer une voiture, il est essentiel de lire les conditions de votre contrat avant de le signer.
Don’t forget to compare car insurance with our tool to find the perfect car insurance based on your needs and budget.
If you can’t afford to buy a car, you can choose financing (auto loan) or leasing (lease agreement). In both cases, you will have monthly payments. But with auto financing, you will own the car once the loan is paid off.
As a general rule, buying is more profitable than leasing. But several factors need to be considered, such as the car’s value, interest rates, the term of the lease or loan (auto financing), taxes, and so on.
As a general rule, dealers require a minimum credit score before granting a loan. This score is between 550 and 600. If necessary, you can improve your credit score by following the tips and tricks on our site.
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