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How a Loan Works

In order to pay off a loan within a given period you need to divide the cost of the vehicle by only five years. In a lease you only pay the depreciation of the vehicle, not the entire price.

Because you are paying the entire balance of the cost of the car in a loan, you own the car at the end of the term. This also causes the payments to be much higher in a loan than in a lease.

Remember, even though you own the car at the end of a loan, you still lost the same amount of value in the vehicle as if you had leased it. The only reason you own the car at the end of a loan is because you paid the extra money each month to pay off the principal balance.

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