Purchasing a new car is one of the biggest financial decisions a person ever makes in life. When purchasing a new GMC truck, SUV or crossover, you can choose to either finance or lease it. The two options greatly differ in principle yet are similar in one thing only: they allow you to settle the cost of the vehicle in small manageable monthly payments.
Financing vs. Leasing
A financing arrangement is also known as an auto loan in car deals. You first place a down payment on the total cost of the vehicle and the lender pays for the remainder. The lender can be a financial institution, your employer or car dealership. You then pay monthly installments that include the loan amount and interest. You own the car at the end of the payments.
Leasing, on the other hand, is a form of vehicle hire. You pay for the depreciation value of the car during the period which you will use it. For example, if the price of a GMC Terrain falls from $36,000 to $20,000 after a lease period of one year, you only pay for the $16,000 not the entire car cost.
Leasing is a great choice if you are not interested in owning the car but would like to use for a certain period. There are numerous GMC lease deals today. Here are three hidden costs that you should keep in mind when entering a leasing deal.
- Extra Mile Charges
When you go leasing, you have a mile limit beyond which you are charged per mile. Most GMC lease deals involve a 15 to 20 cents charge on each extra mile. Simply put, if you drive an extra 10,000 miles at 10 cents per mile, you will pay $1000 extra. The charge is scary, but fortunately, you can negotiate it before signing the deal.
- Wear and Tear Fees
If you are a reckless driver or prevailing circumstances such as kids or any hazard increases the likelihood of damaging the car, do not lease. Wear and tear charges can go up to the total of three months installments.
- Early Return Charges
So you signed a 24 months’ lease, but after a year you feel you need to try another car. Well, you can return the car but you will be charged for the 12 months you have not used the car. The amount varies from one dealer to another.
Besides these, there are other charges such as tax when you use the vehicle for business.
Leasing is good as a short term measure to meet commuter needs. However, purchasing a car is cheaper in the long run. For a quick transport solution, you can find GMC lease deals near you.