In today’s uncertain economy, many people are hesitant to go into debt to buy a new car. However, once your old car reaches a certain age it can “nickle and dime” you to death as it starts to wear out and different components need repairs. You can actually end up spending the same amount in car repairs that you would for a car payment each month, just to keep your old car running.
Leasing a car is a wonderful option that many people do not realize is available. Leasing offers many advantages over buying, starting with saving money. To decide if leasing is a good option for you, you need to understand the difference between leasing and buying a car outright. Following are several advantages of leasing vs buying a car.
Save Money on Up-Front Costs
Leasing enables you to drive a new car without a large down payment or having to trade in another car. Basically, a lease will require the first month payment, a security deposit, and a few administrative fees. Buying a car requires either payment for the entire car up front, a trade-in, or a large cash deposit to reduce the amount of your monthly payments. In addition, you have to pay sales tax on any car you buy. Leasing a car does not involve sales tax.
Save Money on Monthly Payments
Lease payments are based on the amount that the car depreciates over the life of the lease. When the lease is up, you return the car while it still has value. When you buy a car, the payments are based on the total value of the car. Generally, lease payments are going to be lower than purchase payments for the same car.
Save Money on Maintenance, Repairs, and Gas
Cars that are leased are new cars that are still under the manufacturer’s warranty. This means that anything that goes wrong with the car will still be covered. Even regular maintenance costs such as oil changes and tire rotation can be covered under some lease agreements. In addition, newer cars get better gas mileage saving you additional money. Driving a leased car can actually save you money in the long-run over driving an aging car that is starting to break down.
There are other advantages to leasing vs buying a car. When the lease expires, you can just return the car to the dealer and upgrade to a newer car or you have the option to purchase the car at that point. You do not have to go through the difficult task of trying to sell a car you purchased when you are ready to upgrade to a newer car.
Leasing a car comes with some additional stipulations. The is generally a limit on the mileage you can put on a leased car. This is because the more you drive, the more the car depreciates. The lease payments are based on an estimated depreciation based on mileage. Some leases can be upgraded for more miles if you think you will need them.
When you lease a car it does not belong to you. You can not make any modifications such as detailing the paint job or upgrading the sound system.
Leasing is an excellent option for anyone who wants to lower the initial cost of driving a new vehicle, save money on repairs, and upgrade to a new vehicle every few years.