Motor Vehicles Dilemma: Loan or Lease?
When you want to finance the acquisition of a motor vehicle the question that always rises is whether it is better to finance a motor vehicle purchase by using a specially tailored loan,
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Thus, before deciding which option is best for you,
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Credit And Income Requirements
Loans imply harsher credit and income requirements mainly because the monthly payments on loans are higher than on lease contracts. In order to obtain a motor vehicle loan you need to show proof that you have a steady income fit to afford the monthly payments without having to make sacrifices and though the same goes to leasing, the amounts you will need to show you can cope with are smaller.
Leasing has less requirements because the motor vehicle remains property of the financial institution and if anything happens with the vehicle the insurance for which you will pay a monthly premium will cover for the loses. Thus, there is little risk for the financial institution which allows them to provide you with the motor vehicle without many requirements.
Leasing Explained
When leasing a motor vehicle,
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Leasing provides a lot of flexibility: the applicant can use the vehicle just like if he owned it and the financial institution takes little risk because he retains the title of the vehicle and any damage is covered by the insurance for which the applicant has to pay a fee usually included in the monthly payments of the leasing contract.
Loan Or Lease?
Motor Vehicle loans and home equity loans can both provide you with the financing you need to purchase a motor vehicle. The latter is the best option if you are a homeowner as it provides inexpensive financing and the best loan terms. But if you can not afford such high monthly payments or you prefer to be able to exchange the vehicle for a new one in the near future, you should go for a leasing contract that provides more flexibility and more options for you if you change your mind about the vehicle. In any case, you should ponder the costs of each transaction prior to applying to see which one best suits your needs. Amanda Hash, expert financial consultant, specializes in Car Loans for Bad Credit and Government Grants. Visit her at http: //www. yourloanservices. com/Topics related articles：
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