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Leasing vs buying: What to know

Posted on Wednesday, December 23, 2015 at 10:48:21 AM

Car leasing has found itself center stage in 2015 as drivers eager for low monthly payments turn to it in force. Experian reported early this month that leasing accounted for about 27 percent of all new car transactions in the third quarter, up from 24.7 percent over the same period in 2014 and the highest proportion the company has ever recorded since beginning to publicly disclose their data in 2006.

However, despite the blockbuster figures, drivers should be cautious about embracing auto leases too quickly. Monthly lease payments can be more affordable than those associated with loans, but only to a certain degree. Conditions written into leasing contracts have a bad habit of making them considerably more expensive long-term. If drivers aren't snared by the regimented monthly payment schedules, then fine print stipulations - like caps on mileage that incur fees when broken - may very well do so.

Since leasing isn't for every driver, auto financing should be considered. According to Experian, the amount of cars with financing hit an all-time high of 86.6 percent in the third quarter. Particularly for drivers with good credit, financing presents a manageable, shorter-term payment schedule than leasing typically does. With great low interest auto finance loans like those from Home Loan Investment Bank, buyers can get behind the wheel of a perfect new or used vehicle just in time for the holidays.