Finance, Lease, or Cash for Your New Jeep. Which is best?

Most people finance, a smaller percentage lease, and even fewer pay cash; but this is not indicative of which is best, as each option has its own set of advantages. Deciding on your method of purchase is highly dependent upon details such as how long you wish to own the vehicle, your current credit score, and how much cash you have in the bank. Regardless of your financial situation, each option should be scrutinized before making such a significant purchase.  Here's a brief explanation of each method from Mount Airy Chrysler Dodge Jeep Ram.

Paying Cash For Your New Jeep: A positive to this method is a lack of worry over charges or finance fees; also, when using cash, you hold the title (rather than the bank), making for less hassle if you choose to sell the vehicle later down the road. And, first and foremost, you do not have to make monthly payments! A negative aspect to paying cash is that most often people don’t have such a large sum stowed away, and if they do, it may need to be set aside for another weighty buy—a house, college, nest egg…the list is never ending.  

Leasing Your New Jeep: This option usually allows for a new model annually, and the vehicle is typically always under warranty, eliminating worry over engine or other performance problems. The monthly payments for leasing are often less than financing. Additionally, there are highly beneficial tax cuts when the leased vehicle is used primarily for business purposes. When leasing, you do not have to worry about making a down payment—assuming your credit is good enough. Negative aspects to leasing include a requirement of more than simply having basic insurance: often dealerships will require a specific amount or type of insurance, resulting in a higher monthly fee. Also, although a leased vehicle is covered with warranty, it is not covered for scratches and dents, which will have to be paid out of pocket.

Financing Your New Jeep: The most commonly used method of purchase for Americans, this option allows you to use the bank’s money, freeing up your disposable income and the time it can take to save enough money to pay cash. Credit scores determine the type of financing available (the higher the score, the lower the interest rate), and there are usually nice warranty packages out there for financers. The down side to financing? Your monthly payments are usually a little higher than when leasing, and there is usually a hefty down payment required.

So which method is best? The answer is found through research to determine which makes the most sense for you. 

Andrae Bergeron