There are many reasons to get a new car. Your old car may be on its last legs, you may need a larger vehicle for a growing family, or you may simply be tired of your current vehicle and want something new. No matter the reason for getting a new car, you have to decide whether you want to lease your next car or buy it. Leasing a car can often be a more economical choice, and there are many benefits to leasing that a lot of drivers may not realize. To help you decide if buying or leasing is right for you, we have included some of the benefits of leasing your next vehicle.
When you go to buy a car, the down payment and up front costs can be prohibitive to getting a newer vehicle. Many dealerships require a percentage of the cost of the car as a down payment, plus the tax, registration, and any other fees associated with the loan origination, which can add several thousand more dollars on top of that. Leasing, on the other hand, typically has a much lower cost to drive off in a brand new car. Usually just the first month’s payment, taxes and registration, and a security deposit that is often refundable. Many dealerships run specials where the first month’s payment is waived or there is a lower deposit, making out the door costs even less.
Financing a car often comes with higher monthly payments than to lease the exact same vehicle. The reason for this is when you buy a car, you are financing the entire cost of the vehicle. With a lease, you are only paying on the depreciation cost of the vehicle over the life of the lease, which is generally around three years.
For example, if the car you want costs 30,000 dollars, and you only have a 2,000 dollar down payment, you will have to finance $28,000 for 36 to 72 months, while getting hit with interest fees. When you lease a vehicle, your payment is only based on the depreciation cost of the car, which, after three years, averages about 45 percent. This means that your monthly payment for the same 30,000 dollar car is only going to be based on 16,500 dollars. This also means that taxes and interest costs aren’t as high as when you fiance to own the same vehicle. That’s a huge difference in payments!
While many vehicles come with a factory warranty for a certain period of time while you own your car, once the warranty runs out, you are stuck paying for any and all repairs. For the life of a lease, your vehicle is under factory warranty, so nearly any repairs are covered, and you just have to keep up with routine maintenance, like oil changes. Similar to buying a vehicle, the warranty does not cover damage incurred during an accident or from failing to properly care for the vehicle.
While everyone knows you can bargain with a car dealership to buy a car for a lower price than advertised, did you know that you can also negotiate terms when leasing a car. From lower interest rates and monthly payments to a higher mileage allowance, the dealership may work with you on getting a great deal.
Leasing also has other benefits. You can lease a new car every few years, so you will always have the latest technology and safety features compared to driving an older car. If you are leasing a car for work or business purposes, you can write the expenses off on your taxes. When you lease a vehicle, you can always be in the car of your dreams at an affordable price.