Which Auto Financing Option Is Right For You?

Which Auto Financing Option Is Right For You?

When it comes to auto financing, you have options. But how do you choose which is best for you? We’re answering your top questions to help guide your decision.

What is the difference between leasing, buying and having a balloon contract?

• Leasing: When you lease a new vehicle, you pay to drive it for a portion of its life.
• Financing: Once you pay off your retail contract, you own the vehicle outright.
• Balloon financing for EVs: Certain new GM electric vehicles are eligible for The RightChoice by GM Financial. With a balloon contract, you’ll make monthly payments throughout your contract, with a larger payment at the end of your term. And just like other financing options, you’ll own the vehicle outright after you’ve paid off your contract.

What are some benefits of each auto financing option?

• Leasing: Experience “new” more often with the latest technology, styling and performance enhancements.
• Financing: Customize your vehicle and drive without mileage limitations while you gain equity.
• Balloon financing for EVs: With The RightChoice by GM Financial, potentially qualify for a federal EV tax credit of up to $7,500.

What are the term lengths for leasing, buying or having a balloon contract?

• Leasing: Terms are typically 24-36 months.
• Financing: Terms go up to 84 months.
• Balloon financing for EVs: The RightChoice by GM Financial has terms with a minimum of 36 months.

Tip: Need help deciding what term length is best for you? Read our article on the pros and cons of long-term auto financing to weigh your options.

What will my payment look like if I lease, finance or have a balloon contract?

• Leasing: This commitment typically requires a down payment, with lower monthly payments.
• Financing: A retail contract may not require a down payment and usually has higher monthly payments.
• Balloon Financing for EVs: This contract commonly involves lower monthly payments, with a large balloon payment due at the end of the contract.

What are my end-of-term options if I lease, buy or have a balloon contract?

• Leasing: You can purchase the vehicle for the purchase option amount in your contract, return it, or lease or finance a new vehicle.
• Financing: You’ll own the vehicle outright at the end of your contract period. You can sell it or trade it in at any time during the contract term.
• Balloon financing for EVs: You’ll be able to make the right choice for you. You can sell the vehicle back to GM Financial before the balloon payment comes due. You can also decide to refinance the balloon amount. If you make the balloon payment that’s determined when you begin financing, you’ll own the EV outright. From there, you can trade the vehicle in for a new one, or eventually sell it.

Where can I learn more about auto financing?

Auto financing doesn’t have to be complicated, and there are lots of resources to help you learn more. You can even apply to prequalify online before you test drive your next vehicle. Visit our current offers page to see deals on the latest GM vehicles.

See dealer for details. Tax credit subject to change. Your personal eligibility to claim this tax credit depends on your individual circumstances, including whether your adjusted gross income for the current or preceding taxable year exceeds the income thresholds contained in the Inflation Reduction Act (IRA). You should consult your tax, accounting or legal professional to confirm your eligibility or if you have questions regarding this tax credit. This information does not constitute tax, accounting or legal advice. More information can be found on the U.S. Department of Energy’s Federal Tax Credits webpage.

By Nicole Mayer, GM Financial

Nicole Mayer is a whisk-taker with a fondness for desserts. From baking to organizing, she’s motivated by trying new things and sharing her knowledge. When she’s not in the kitchen rocking out to ‘80s music, you’ll find her serving up aces on the tennis court.