Auto leasing gets an awful reputation. That’s because in the long term it is usually cheaper to buy than lease. Most people stop when they read that fact. However, I’d like you to keep reading. There are actually many reasons why leasing may make sense in your situation. The math may not always work out in favor with leasing, but there are so many benefits that you may find it worth the added expense.
You Can Get into a Nicer Car for Less
Surprisingly enough, 75% of luxury cars are leased. It’s because luxury cars typically have high residual value. Because of this, after you return your leased vehicle, the dealership can still sell it for a high price. Therefore, a dealership does not need to lease a luxury vehicle for a lot more than a regular vehicle. When they sell it, they will still get a lot of money for the car. Your lease won’t have ruined its value. You can get a lot more car for not much more money when you lease a luxury vehicle.
Down payments are also low for a leased vehicle. If you’re newly married and just bought a house, you may not have much extra cash around for a car down payment. This is where leasing comes in handy. ‘Zero down’ leases are even available. That means you can get into a leased vehicle without a down payment. This will result in higher monthly payments but maybe that’s okay for your situation. You get to spread out the cost. And many people believe it’s wise not to give a down payment. When you do, that money is gone forever. If you wreck the car at the first stop light, your insurance pays the dealership that owns the car – not you. If you put $5,000 down, that was a short $5,000 ride down the street you just paid for.
You Get Tax Benefits When Leasing
Leasing is simple. You only pay taxes on your monthly payment. If you were to buy a car, you would pay tax on the purchase price of the car within 30 days. Talk about a major added cost. Your business may get breaks as well for using a leased vehicle.
A Lease Means Less Hassle
Leasing a car is easy. Besides insurance, you just pay a monthly bill. The car is new enough, it’s most likely completely covered with a warranty. Many dealers will maintain the car for free as part of the lease agreement.
Leasing can also be fun because it means you get to try out a wider selection of cars. If you were to buy a Mazda MX-5 and hate it, you’d have to sell it and buy a different car. Buying and selling cars is a hassle. You would likely stay in your same car far too long just to avoid the hassle of selling. You would be jamming your golf clubs into that small car for years. With leasing, you simply hand in the keys at the end of your lease and try out another model.
If You Do Lease, Keep These Things in Mind:
Do Not Terminate the Agreement
If you terminate your lease early, you may face stiff penalties for breaking the contract. Sometimes even thousands of dollars.
Treat the Car as Your Own
Dealerships charge for abnormal wear and tear. You may think that because it’s not your car, that stuff doesn’t really matter. But with a lease, it definitely matters. It actually matters more than if you owned the car. If you got a door ding on your own car, you could choose to fix it or forget about it. With a leased car, the dealership will charge you for the damage.
Don’t Do Non-Reversible Modifications to the Car
When the car goes back to the dealer, it needs to look as if it just came from the factory. The only changes you should really do, if you would like to, are small things like floor mats and window stickers of your favorite band, sports team, or computer manufacturer. If you modify the car heavily, you may get charged a fee from the dealer. Also, you would lose all that money you spent making the car unique to your personality.
Is leasing right for you?
Only you can answer that question. But if you like driving around in a nice car you couldn’t otherwise afford, choose leasing.
I’m a personal finance freelance writer and webmaster. I welcome you to visit me at www.thefrugalpreneur.com