Car Leases Vs. Car Buying
Car leasing is a wonderful way to drive a much nicer car for a significant amount of savings over a short-term period of time. This is because the financing options are much different for buying than they are for leasing. The first thing many people consider before leasing or buying is the amount of money they have on-hand for either option. No one can buy a car with money they don’t have. So in an ideal scenario, someone can buy a car they really love up front and drive away in it toward ownership. In reality, if you don’t have the cash on hand to afford the down payment for your preferred car, you end up driving away in a vehicle you settled for. From there, you have to settle for it for the next decade or so.

Leasing opens so many other doors to what you’re going to be driving over the next few years. The critical difference is in the financing arrangements for buying or leasing. This means that the outcome is much different.

Roadmap to Leasing

When you lease a car, the dealership will determine exactly what your monthly payments will be. Because of the looser leasing arrangements, you’re going to get a lower monthly payment and be able to afford to lease a much nicer car than you would be able to afford to buy. Sounds great, doesn’t it? In nearly every scenario, this is the preferred way to go, but the fact is that some facets of leasing may muddy the waters along the road to leasing.

1. Credit score check: Your credit score will play a vital part in whether or not leasing is an option for you. Leases require higher credit scores than buying, making some people unable to lease at all. This is your first obstacle to the glory of leasing.

2. Monthly payment calculation: Many things determine your monthly leasing payment. Dealerships will look at credit score, money factor (APR), depreciation value of the car over the course of the lease, and overall price of the car. All of these things will be considered and a final leasing monthly payment number will be determined. Thanks to the fact that you aren’t financing the total price of the car, your leasing payments will be much less than if you’d bought the car. This is the great perk of leasing. You can afford to lease a car you couldn’t buy and be able to have the benefit of driving a car you really love.

3. Determining set miles: Leased cars must driven only a set number of miles per year. Anything over that mileage is going to net you hefty fines for everything mile over. This can be so costly it makes leasing not worth it. Leasing is a fabulous option but if you need to drive a car a lot, anything over 15,000 miles a year, then buying might be a better option.

4. Completing the lease and disposition fee: After you’ve leased a car, the dealership will require a $300-$500 disposition fee which goes to help in cleaning up the car and paying for any damages to the car during your lease period. Figure this into the final cost of your leasing arrangement to be sure it’s a good idea.

5. Enjoying your leased car: Since you’ve gotten a car you truly love and can be proud of, you’re going to love your low monthly payments during the lease period. You’ll also love the fact that you don’t have to commit to the car after the lease is up. Except for the disposition fee, you’re free of your leasing agreement and can either buy a car or lease another car. This leaves a lot of room to drive different great cars over the years.

Making the big decision

As long as you’re not a very high mileage driver, and you have a decent credit score, leasing is one of the smartest things you can do. While you’ll never own the car or be able to modify it in any way, you’re going to love the freedom that leasing gives you. You get a high quality car and low monthly payments. That’s great news!