Why Leasing may be a better option for you
So, you’ve chosen a car. Whether it’s everything you’ve dreamed of, or just a means to get from Point A to Point B, you’re likely wracking your brain trying to figure out how to pay for it. You could take out a loan from the bank and buy, but that may not be the most convenient option, especially if you lack a lot of money for a down payment, would rather always have the latest and greatest technology, or don’t like the hassle of reselling an old car once its reached its expiration date.
If this sounds like you, then an auto lease may be the right choice.
Leases allow you to get the brand new car you want without having to pay for the entire thing. Instead, you’re paying what is known as the depreciated value, which is the difference between what the car is worth at the start of the lease versus what it’s worth at the end. As a result, monthly payments for leases are lower than those for a loan, so you’ll have more money to spend each month. The cost required to enter a lease is most often less than the down payment required to buy (and sometimes the dealer will waive the down payment all together), the only additional costs being applicable fees at the end of the lease involving extra mileage and more than expected wear and tear. It’s important to note that such fees can be negotiated during the initial contract.
In addition to a decreased cost, the length of a lease is also short; generally three years, giving you time to enjoy your car without having to worry about the major costs that often come with owning a vehicle, like long-term maintenance and repairs. New cars come with warranties (three years or 36 months), and because the lease encompasses that span, such costs would likely be covered if something were to happen to the vehicle. However, if you decided to purchase a car, you would be on the hook for any part that required repair, which would only occur more frequently as time went on. Leased vehicles are returned to the dealer at the end of the lease period, allowing you to get another new vehicle instead of trying to maintain an older one.
If you happen to drive for a business, then leases are even more favorable. You can deduct part of the depreciation value and financing for the car on your taxes under a lease, which is something you can’t do with a car loan.
It’s important to note that while leases are a good option for short-term ownership, if you intend to use a particular vehicle longer than the lease period, then it’s probably best to just buy it, as you can earn equity towards your next purchase. Buying is also better if you drive a lot of miles, want to make heavy modifications to the car, or aren’t someone who’s a particularly careful driver, as all of these will incur extra costs at the end of a lease term.