With the ever-increasing cost of new vehicles, more drivers are opting for either longer-term loans or leasing as a way to lower their monthly payments. Consider some of the following advantages of Car Leasing:
- Cost Savings – The cost to lease a vehicle is typically less than purchasing because you are essentially paying for the amount the vehicle is anticipated to depreciate in value. Purchasing a vehicle involves the retail price (the value of the car at the time of purchase), whereas with leasing, a different value is considered. That value is referred to as residual value and is an estimate of what the vehicle will be worth when the lease term is completed. Your monthly payment is based on the difference between these two values.
- Low Down-Payments – Usually a low down payment equal to two or three monthly payments is all that is needed to get you behind the wheel of a new car. It is not unheard of to negotiate no-money down at all or see vehicles offered without deposits.
- Mileage – If you drive over 10,000 to 15,000 miles per year, leasing might not be an option you want to consider, as it is likely you pay for every mile exceeded per the contract. However, it is important to realize that you also get penalized for excessive mileage on trade-ins as well.
- Maintenance – A leased vehicle will always be protected under the warranty, so if something breaks or malfunction, repairs are covered. However, parts like tires or brakes that need repair or replacement, may be the driver’s responsibility, unless an extended warranty is purchased. If you are hard on vehicles, you risk being penalized for a dings and dents, or interior damage beyond normal wear and tear.
- Always Have a New Car – One of the biggest benefits of leasing, is that one can usually upgrade to a model that they couldn’t afford if purchasing. It’s estimated one of three luxury cars on the road are leased. Others like the idea of driving a new vehicle every few years.
So, in the short-term, leasing is the least expensive option. One has the opportunity to drive a new automobile every two or three years and its returned to the leasing company at the end of the term. It eliminates haggling a new purchase price or trade-in value on a vehicle and drivers don’t lose money due to depreciation.