The most common methods for financing automobiles are through car loans or car leases. Car loans are personal loans provided by banks and credit unions and can be repaid over a period of years. However, with a car lease, a person never owns the car. The bank or credit union selected purchases the car and rents it to you for a fixed period. Once the fixed period of the lease expires, the financial institution takes back the car and sells it. In this assignment, you will compare the differences between car loans and car leases.
A car loan is one of the most significant investments made by a typical American family. An alternative to the traditional auto loan is the auto lease.
- Examine the differences between a car loan and a car lease. Consider the following factors:
- Advantages and disadvantages of both leasing a vehicle and purchasing a vehicle
- The process you will personally follow in making a decision on taking a car loan or leasing your next car
- Explain how leasing versus financing a new automobile changes your insurance options/requirements for the automobile. Consider that auto insurance requirements differ by state.
- Describe the requirements specific to your state and whether insurance requirements differ on a financed purchase over a lease.
- Identify other variables that influence one’s insurance premium.
- Describe the actions one can take to ensure that auto insurance premiums are not unnecessarily high.
Write your initial response in 200–300 words. Apply APA standards to citation of sources.