You pick Essay Example | Topics and Well Written Essays - 750 words - 2

You pick - Essay Example Notably, at the end of the leasing period the person who pursues the leasing option will have to begin a new lease or buy cycle. On the other hand, a person who buys a new car will own the vehicle after completing paying all the dues. In the long-run, a person who leases the car pays more than the one who pursues the purchasing option. The loan and lease terms differ markedly. Buying a vehicle implies that the buyers will have the responsibility of paying the entire cost of the vehicle without considering the number of miles covered. Typically, the lender determines the total cost of the vehicle that includes sales tax, down payment, and interest rate. A loan needs an individual to invest a down payment in the vehicle. The borrower will have to decide the amount of savings to cater for the down payments. The more the loanees put down, the less they will require borrowing from the bank (Reed). The loan then funds the remaining amount. The borrower will have to pledge other assets for collateral. In addition, the loanee will have to bear all the risks including the vehicle devaluation especially with increasing pace of technological advancements. Fundamentally, loan size, loan term, amount of down payment, and interest rate determine the monthly payment on the auto loan. The terms of renting differ from that of the loan. Leasing implies that the individual pays a portion of the cost of the vehicle. The portion paid is the part the individual uses during the driving period. The charges of sales tax reflect in the monthly charges (Avdul and Steve 73). In addition, a person can opt to pay a down payment under leasing. Hence, the payment of down payment is not a mandatory in the leasing option. Money factor that is similar to the rate on the loan is paid. The lease vehicle is only the requirement for securing a leasing transaction. In addition, the lessors bear the risk of obsolescence because an obligation to own the vehicle does not