For most people, their second largest purchase or investment they will make in their lives is a car purchase, and with a car purchase, their are usually two options. You can either choose to buy the vehicle, with a down payment after the negotiated price is settled upon by both the customer and the car dealer. Another option is to lease the vehicle, which is similar, but also different, from buying the vehicle. With leasing the vehicle, you are paying less monthly and are putting less of a down payment down of the car, but is it truly worth it? Many new car owners have chosen to lease cars, instead of buying them, as they think they are cheaper and are getting the better deal. While leasing the vehicle is appropriate for some individuals, you should really look into the pros and cons with leasing a car, as it may or may not be your best option when it comes time to buy a new set of wheels.
What Is “Leasing”?
When you are choosing to “lease” a car, you are accommodating for certain restrictions, in order to get a better short time deal on the car. Car dealerships are usually picky on their candidate choosing for car leases, but once you are approved for the leasing, you could enjoy a newer luxurious car every couple of years. In general terms, leasing a car is a deal with the car company that allows you to use the targeted vehicle, for a pre negotiated length of time. During this period, you are allowed to use the vehicle, but strict mileage limits and conditions are placed onto the vehicle. The mileage usually varies with the dealership and firm, but most mileages rarely exceed 15,000 allotted per year, with the range generally being 12,000 to 15,000 warranted to the customer. Among mileage limitations, the cars usually have to be returned at the end of the deal, and with this return, the car usually has to be in the same shape as it was when the original purchase was made. Leasing is like renting the car for an extended period, where monthly payments are required, as is a down payment. Leasing differs from buying in the fact that the people leasing the car are not keeping the car at the end of the termination, as they are only borrowing the car for the negotiated duration.
What Are The Pros Of Leasing?
1. For some, leasing a car is the perfect option to their transportation dilemma. Among many things, leasing a car has many advantageous benefits that makes it more ideal than buying a car. For one, leasing a car allows you to try out the newest models that dealerships have in stock. While some model’s availability will depend on the dealership, many known dealerships and manufacturers allow for early access to the newest models they have in stock. This means you could be driving this years newest model!
2. With leases, you are generally spending less on down payments and monthly payments, as you are not actually purchasing the car. This is great for those who need a car, but don’t have the correct assets for buying a car, so leasing is usually the best option for such cases. If down payments are something you have trouble coming up with on the spot, you can usually pay way less if you choose to lease the car, instead of buying it.
3. Since most leases extend to three years, you will probably be covered under minor repairs and modifications under the manufacturer’s warranty. This means, in the case that situations happen under those three years, you will be covered under this plan. You can also enjoy the latest technology and luxurious features of the newest cars, a fact that isnt always available for those looking for buying certain car models.
Cons Of Car Leasing
1. So far, leasing a car sounds like the perfect investment, right? Well, there are some drawbacks with choosing to lease a car, and for some, these facts are deal breakers. For one, you aren’t actually buying the car. This means, while you may put serious value or equity in buying your vehicle, which is very important when trading it in for other models, you are having no investment in the leased car. You are also responsible for staying under the allowed annual mileage, meaning if you go past this allowed mileage, you may be forced to pay mileage fees. These fees can sometimes be 25 cents per mile! So keep that in mind when choosing to lease a car.
2. If you fail to keep the car in excellent condition, you may find yourself facing other fees that are necessary to pay. If you choose to terminate the contracts earlier, cutting the contracts short of their duration, you often face early termination fees as well. Many think leasing a car is cheaper than buying, but in most cases, this is incorrect. While at first leasing a car may be cheaper, once you get past the down payment and monthly payments, you may find you are paying more to lease than to buy the car. This is because these monthly payments are usually longer in duration than buying the car. Since you are not buying the car to own, leasing a car may not be the best option for those looking for vehicles that will last them past a couple of years. In short, leasing is probably best for those who are financially comfortable, and are looking to borrow the year’s newest models every 2-3 years.