Low Monthly Payments
When you lease a car, you only pay for a portion of the vehicle’s value that you actually use during the full course of the lease term. Because of this, your monthly lease payments are typically thirty to sixty percent lower than what the payments would have been if you were buying the same vehicle and for the same term. You don’t have to pay extra towards your monthly payment in order to “invest” in equity for owning the vehicle.
No Down Payment
A lot of leasing deals don’t require a down payment. When you buy a new vehicle, you will typically have to come up with a large amount for a down payment in order to get approved for financing. However, if you don’t make a down payment, you might still be required to pay the first month’s lease payment and tag and registration fees. It should be kept in mind that certain promotional deals may still require some sort of down payment.
More Vehicles, More Often
The fact that your monthly payments are lower with leasing means that you get more car for less money compared to buying. The amount you could pay to lease a luxury car would only get you an economy car if you were buying. Also, you will be able to lease a new vehicle every two to four years.
Less Maintenance Worries
One great benefit about leasing a new car is that you can generally lease a car in a term that coincides with its manufacturer’s warranty. This is good because if something goes wrong with the car, you will be covered under the warranty and out-of-pocket expenses will be minimal. Many car companies also offer free routine maintenance throughout the lease as well.
No Used Car Woes
When you lease a new vehicle, you won’t have to worry about trying to sell your used car in order to get a new one. At the end of your lease term, you will have the option of trading it in and signing a new lease on a newer vehicle. You will also be given the option of purchasing the vehicle you just finished leasing as well.
When you purchase a car, you will need to pay the sales tax on the entire cost of the vehicle. Alternately, when you lease a new vehicle, you will only have to pay sales tax on a portion of the value of the vehicle you’re leasing during the lease term. The tax will be spread evenly throughout the monthly lease payments instead of needing to be paid all at once like when you buy a new vehicle.
Less Cash Spent At First
Like stated earlier, most car leases don’t require a down payment to get approval. This means that you spend less upfront and save on your spendable cash for other things you might need more. However, you are able to make a down payment or trade in another car if you choose to. Doing this will lower your monthly payments even more. For many people, the ability to save your cash is a strong incentive for leasing.
Most vehicle leases come with free “GAP” coverage. This coverage will protect you in the unfortunate event that your leased vehicle gets stolen or totaled in an accident. The coverage will help to pay off whatever your insurance won’t cover in a full loss of the vehicle. When you buy a car, you will typically have to purchase GAP coverage separately.
The primary advantage of leasing a new vehicle is leverage. The financial savings that come with leasing outweigh buying a new vehicle. You will only have to put little to no money down upfront. With this and the low monthly payments, having a new vehicle every few years makes leasing the perfect option for most people. The decision to lease a new vehicle versus buying one comes down to each individual’s specific situation and figuring out what will work best for their needs, wants and their financial status.