3 Common Myths About Car Maintenance When Leasing Vs. Financing

Everyone wants to find the best budgeting balance that works for them and their lifestyle, but only a few people can ultimately pay for a car upfront. Fortunately, if you aren't able to pay for a car upfront, there are two viable options to consider for the average person. These include leasing and financing a car.

What's the difference between leasing and financing a car?

A car lease is a contract in which one party allows another party to drive a vehicle for a certain period in exchange for partial payments, usually monthly instalments. Unless your agreement includes the option to purchase the car at the end of the contract period, you must return it to the vendor.

On the other hand, financing a car means borrowing a loan that you can repay over time. When you borrow a new auto loan, you agree to repay the amount you have taken out, plus interest and other charges, within the agreed period of time. Car financing options include online lenders, banks, credit unions, financial institutions, and some car dealerships. With financing, you own the car.

Myths around car maintenance when leasing vs. financing

Leasing cars has been a new trend in the last decade, but there have been misconceptions about vehicle maintenance between leased and financed cars. Here are the three common myths surrounding car maintenance regarding leasing versus financing.

1. Maintaining payments is trickier when financing an auto loan

Ultimately, this myth is true. Keeping up with payments when financing an auto loan is more complicated than leasing a car. However, simply because it might be a trickier process doesn't necessarily mean it's a bad thing. It just means that financing isn't as easy as leasing a car.

Actually, having uncertainty works in favor of many people. If you are struggling to make regular payments due to a high monthly rate, you can extend your term and thus lower your monthly cost. Furthermore, if you have gradually improved your financial situation, can make a considerable monthly payment, and reduce your loan term, you will also be allowed to do so. Both cases can help you retain or even improve your credit score.

2. Leasing a car makes maintaining mileage more difficult

One of the biggest factors that impact a car's value over time is its mileage. For instance, you wouldn't want to buy a car that has covered over 100,000 kilometers as it's precisely likely to lead to mechanical issues. For a vendor that leases cars, having a vehicle with high mileage in their lot wouldn't make sense. The value of a car depreciates as soon as it's handed over to a new customer, and with the addition of high mileage, it would be difficult to sell or lease for a second time with a profitable margin. Ultimately, this myth is true.

Although the car mileage limit isn't an issue for the vendor, it can be problematic for the consumer. Actually, mileage is only suitable for people who rarely drive or perhaps take out their car twice a week to run quick errands. However, if you live in an area where long commutes are fairly common, a lease isn't the best option, and you could easily surpass your mileage limit within your contract. Leasing is also not a great option if you enjoy taking road trips, as that is another way you can easily eclipse your mileage.

3. Financing an auto loan makes maintaining a car trickier

Leasing and financing significantly differ when it comes to maintenance, one of the biggest expenses in car ownership. One of the biggest perks of leasing is that most of the car maintenance will be covered under the manufacturer's warranty, so you won't have to pay out of pocket. However, keeping your car in good condition throughout the lease is a must. Be sure to check whether there is a manufacturer's warranty during the first stages of signing a contract with your leasing vendor.

On the other hand, financing means you own the car, so you will pay for repairs as problems arise. Your car's potential wear and tear will come down to you, but the good thing is that you decide when, where, and how it gets fixed.

For these reasons, this myth is false. Maintenance cost is higher when financing, but at least you can do it on your own terms. Maintaining a car when leasing requires consistent work to keep it in excellent condition, and it depends on the contract you have agreed upon with your vendor.

Final thoughts

Whether you want to lease or finance your car depends on your long-term goals. If you are the kind of person who likes buying new cars every few years, leasing could make better sense financially. However, taking out an auto loan is your best option if you intend to purchase a car and use it until its death. Essentially, it all depends on the level of financial commitment and ownership you want to have on your vehicle.