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Is it Better to Lease or Finance a Car?

Thinking about getting a new car? See these pros and cons for buying vehicles versus leasing them.

When it’s time to get a new vehicle, you have to make many decisions. One of those decisions you might have to consider is if it is better to lease or finance a car. While both choices can lead to you securing the vehicle of your dreams, there are advantages and disadvantages associated with each option.

Difference Between Leasing And Buying A Car

When you buy a vehicle, whether with cash or through financing, you are paying for the full cost of the car plus registration, taxes, and other fees. Once you finish paying for the car, it’s yours to keep if you choose to do so.

Leasing a vehicle on the other hand only requires that you pay for the depreciation that occurs over the term of the lease plus other required fees. Once your contract ends, you do not own the vehicle. Instead, you have the option to enter into a purchasing agreement for that car or lease/buy a different vehicle.

Advantages Of Financing A Car

Vehicle Options

Whether you pay for your car in cash or finance the purchase, once it is paid for, you own it outright with access to the title. You can then choose to keep the car, trade it in and use the value to go towards a new or used vehicle, or sell it.

Also, you can sell or trade in your car at any time. Even if it’s three months into a 48-month financing term, you can go to a dealership, and they will buy your car with no fees or penalties to pay.

Mileage and Maintenance

You have the freedom to do what you want to your vehicle when you buy it. There are no rules regarding where you drive, what you use your car for or the number of miles you put on it.

The wear and tear you put on your car won’t require you to make extra payments at the end of your financing term either. These factors can impact the value of the car if you choose to trade it in or sell it in the future, but it’s ultimately up to you.

Disadvantages Of Financing A Car

Financial

Payments are higher when you buy a car because you’re paying for the total cost of the vehicle plus any additional fees. This makes the car a more expensive investment on a short term basis while you are still paying it off.

You will also pay more in sales tax because you are responsible for taxes on the total cost of the car, not just the depreciation as you are with a lease.

Maintenance

Because you are more likely to keep the vehicle you purchase longer, your warranty might run out. A car that’s not under warranty can require that you pay more in maintenance and repair costs over time.

Advantages Of Leasing A Car

Financial

The monthly payments tend to be lower than buying a car because you’re not paying for the full cost of the vehicle. Instead, you are paying for the depreciation over the time of the lease plus any interest, taxes, and fees.

Vehicle Choices

Vehicles available for a lease must meet specific mileage and age standards, so you will have a newer vehicle. Newer cars come with all of the latest and greatest that technology has to offer.

Also, because you will have a newer car, it will remain covered under the manufacturer’s warranty.

At the end of your lease, you can easily turn in your car without the hassle of a trade in or selling your vehicle and continue to get a new car every 2-3 years.

Disadvantages Of Leasing A Car

Financial

There tend to be more upfront costs when leasing which can include the first month’s car payment, a security deposit, acquisition fees, a downpayment, taxes, etc.

If you decide to end your lease early, the fees can be costly, sometimes just as expensive as if you continued to lease through the end of the contract.

Vehicle Options

At the end of your lease, you don’t own the vehicle. Instead, you will have to enter into a purchase agreement to buy the car or lease/buy a different vehicle.

Mileage and Maintenance

There is a limit to the number of miles you can drive during your lease. Usually, your contract will stipulate that you can’t drive more than 15,000 miles per year or you’ll have to pay for each additional mile. The cost of each extra mile can be upwards of 30 cents.

When your lease ends, you might be hit with unexpected costs associated with the condition of the vehicle. Therefore, you could be responsible for hundreds or thousands of dollars in additional fees at the end of your lease.

Deciding If It Is Better To Lease Or Finance A Car

Ultimately, your choice is dependent on your financial situation. You have to consider which option would be better for you, your lifestyle, your ultimate vehicle goals, and your budget.

Whether you need help deciding if it is better to lease or finance a car or you’ve made the decision, and you’re ready to get the process started, at Listerhill Credit Union we are here to help you achieve your vehicle goals.

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  • The Great Giveback Official Rules

    1. Eligibility: No purchase or obligation necessary to participate and win. All participants must be 19 years of age or older at time of contest participation. Employees of Listerhill Credit Union are not eligible to register for the contest.

    2. How To Enter the Contest: All Listerhill members who have consumer loans in good standing, (subject to limitations below) are automatically entered. Anyone who takes out a new loan with Listerhill Credit Union, or refinances a loan from another lender with Listerhill Credit Union (subject to limitations below) will automatically be entered to win. Limit of one entry per loan.

    NO PURCHASE NECESSARY: To enter the contest without a loan, send a self-addressed, stamped envelope to: Listerhill Credit Union, P.O. Box 566, Sheffield, AL 35660, Attn: Great Giveback Contest Entry. Limit one entry per person. Written entries must be received no later than July 3, 2021.

    Listerhill Credit Union will not be responsible for incomplete, lost, late, misdirected or illegible entries or for failure to receive entries. All entries become property of Listerhill Credit Union and none will be returned. Any questions regarding the number of entries submitted shall be determined by Listerhill Credit Union in its sole discretion, and Listerhill Credit Union reserves the right to disqualify any entries by persons determined to be tampering with, violating, or abusing any aspect of the contest.

    3. Contest Entry Requirements: In the event the Credit Union, in its sole discretion, determines that any Entry contains content that does not comply with these Official Rules or does not otherwise comply with regulatory guidelines, Credit Union reserves the right to disqualify the entry.

    4. Determining the Winner: A Credit Union employee will select at random four (4) $500 winners (one per day July 12-15) and one Grand Prize Winner from all entries received on July 16, 2021. You do not have to be present to win.

    5. Prizes: $500 Cash Prize: the Credit Union will award four (4) members with $500 cash each. Grand Prize: The Credit Union will pay up to $25,000 toward your loan with Listerhill Credit Union, or combination of loans. No loan payments will be made to loans with any other lender. No cash equivalent provided, and the total prize amount may be less depending on the outstanding amount of loan balance(s) with Listerhill Credit Union. In no event will the prize awarded exceed the total amount of the winner’s outstanding balance of qualifying loans with Listerhill Credit Union. Federal, state and local taxes are the sole responsibility of the winner. IRS regulations require the Credit Union file a 1099 on behalf of the winner.

    A Credit Union employee will call the prize winners and the prize winners will be called up to five times during regular business hours at number provided on entry form and will leave no messages. Failure to reach winner during these calls may result in disqualification of winner, forfeiture of his or her interest in all prizes, and selection of a substitute winner drawn from the drum. Winner will be required to schedule a time, at least 48 hours in advance, to visit Listerhill Credit Union, located at 4790 2nd Street, Muscle Shoals AL, 35661 in person, during regular business hours within seven (7) days of being notified to claim prizes by providing proof of eligibility for prize won and completing and signing an affidavit of eligibility and a liability and publicity release. Failure of any Winner to timely contact the Credit Union, visit the above Credit Union office in person and sign and return any required affidavit and release, or to claim a prize or comply with any term or condition of these Official Rules, will result in drawing Winner's disqualification and the forfeiture of his or her interest in the prize. Winners may waive their right to receive prizes. Prizes are non-assignable and nontransferable. No substitutions allowed by winner.

    6. To be eligible to win, all loans must be in good standing (not more than 30 days past due at the time of drawing. Eligible loans are limited to auto loans (no indirect dealer loans), personal loans (no loans secured by real property, such as mortgages, 2nd mortgages, and Home Equity Lines of Credit) and recreation loans made to consumer borrowers (not business or commercial loans).

    6. Participation. By participating, entrants agree to be bound by these Official Rules and the decisions of the Contest. Except where prohibited, acceptance of any prize constitutes winner's consent to the publication of his or her name, biographical information and likeness in any media for any commercial or promotional purpose, without limitation the Internet, or further compensation. Prizes not won and claimed by eligible winners in accordance with these Official Rules will not be awarded and will remain the property of the Credit Union.

  • How do I redeem my Merchandise Rewards?

    The easiest way to redeem your Merchandise Rewards is to log into Listerhill’s Online Banking and click the “Get Info” link to the right of your credit card information. This will take you to our credit card servicing site within the same window. Select “Rewards” on the upper right side within the screen (below FICO Score) and on the next screen, click on the CURewards logo. This will automatically sign you in to be able to redeem your Merchandise Rewards points!