When buying a car, many consumers will choose to use auto finance services to reduce their financial pressure. Financial leasing and installment payments are two common auto finance services, each with its own characteristics and suitable for different car purchase needs. Understanding the difference between these two methods will help consumers make the best car purchase decision based on their actual situation.
Financial leasing means that consumers sign a lease contract with a financial institution (usually an auto finance company) and use a vehicle by paying rent on schedule within a certain period of time. After the contract expires, they can choose to purchase the vehicle or return it to the leasing company.
The main features of financial leasing
Only the right to use fee is paid during the lease period: Consumers pay the cost of using the vehicle every month, not the purchase price, so the monthly payment is lower.
Higher flexibility: After the contract expires, consumers can choose to buy the vehicle or return it. Some leasing companies also allow early termination of the contract midway through the lease period, but additional fees may be incurred.
Vehicle ownership is not in the hands of consumers: During the lease period, the ownership of the vehicle belongs to the leasing company, and consumers only have the right to use it.
Lower down payment ratio: Compared with installment payments, the down payment of financial leasing is usually lower, which is suitable for consumers with limited budgats.
Installment payment means that consumers purchase cars through loans from financial institutions and repay the car money to the financial institutions in installments. The amount paid by consumers usually includes the full price of the car (minus the down payment), and the loan will be repaid in monthly installments within a certain period of time.