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Jeep Leasing vs Financing
A loan vs. a lease: Why getting a car loan is a much better option
Shopping for a new or used car can be fun, but the process of paying for that car might seem confusing or intimidating. At Dulles Chrysler Dodge Jeep Ram in Leesburg, VA, we can make financing your next vehicle a lot easier and help you make a good "money" decision: One that will help you build a stronger financial future. We can tell you more but here's why we believe a loan is almost always a far better financing choice than getting a lease.
What does "APR" mean?
A car loan, of course, is a financing arrangment where someone loans enough to someone else to buy the new or used car they need. "Interest" is the money you're paying for the privilege of getting a loan. When you hear about "APR," it's referring to an "Annual Percentage Rate." That's the amount of interest a buyer from Frederick or Tysons Corner, VA pays the lender to borrow money, and it's boiled down to an annual percentage rate.
To give a very simple example, let's say you borrow $10,000 for a car. If you pay an APR of 5%, that means you'll pay 5% x $10,000 = $500 each year to the lender. Remember this is an over-simplified example and that's only the interest portion of what you're paying for your loan. Your monthly loan payment also includes the big part - the cost of the car - plus other fees, but that's basically how the "APR" part works.
What is leasing and how does it work?
Leasing is like "renting" a vehicle. You pay every month for a certain period of time - usually 36 months - to get the right to drive the car. But with a lease, you are not buying the car and you will never own it. When your lease is over, you have to give the car back to the car dealer. If you want another new or used car and you want to keep leasing, you have to start all over again. You're basically renting but never owning a car.
Why a car loan is nearly always better for you than a lease
With a car loan, you're gradually building up cash value in the car and that cash has your name on it. The cash value, or "equity," is real money you can use someday to buy your next car. As you make your payments, it's like putting money in a savings account. That can eventually add up to thousands of dollars that you can someday cash out when you sell or trade-in that car. That cash value is a big help in paying for your next car.
If you simply lease that car, you have to bring the vehicle back to us at the end of your lease and figure out how to get another car. Meanwhile, over the course of your 36-month lease, you haven't built up any cash value at all. In other words, you paid out a lot of money to drive a car but you have nothing to show for it. Plus, you now have to find a way to get another car. Leasing can seem "easy" but a loan is much better for you financially.
We can tell you more about why we recommend a loan instead of a lease
At Dulles Chrysler Dodge Jeep Ram, we help people get both car loans and leases. We understand that, in some cases, a customer from a nearby community like Sterling, VA might find real benefit in a lease. But for most people, we believe a car loan is the best way to gradually improve your financial future and someday own a car. Talk to us any time to learn more about financing at Dulles Chrysler Dodge Jeep Ram in Leesburg, VA.