Everybody loves the feel of a new or lightly used late-model vehicle. Unfortunately, few can afford the hefty price tags that such cars carry along with them. Leasing newer vehicles is an affordable, reasonable strategy of obtaining access to them.
There are three basic approaches to purchasing or obtaining access to cars: buying, financing, and leasing. Buying vehicles involves the outright, total purchase of them, almost always at exorbitantly high prices. Financing the purchase of vehicles features monthly payments towards their purchase, which total price exceeds the already-high price of purchasing them. Leasing, the most reasonable approach to getting a new vehicle, involves paying monthly installments for a definite amount of time, usually between one and five years.
Whereas financing and buying cars provides unfettered, total ownership over cars, leasing provides several benefits that purchasing and financing do not. Here are several reasons why leasing is more advantageous than the other two options when seeking out a car.
Car leases are less expensive, per month and in total
Those who buy cars pay one lump sum of cash. People with cars who finance them pay monthly payments, which total in excess of the outright purchase price. Car lessees, a technical term for those paying payments on leased cars, pay monthly payments for a set amount of time.
Financing monthly payments are based on the total value of the financed car plus normally-high interest. Lease payments are lower in relation to total purchase price than financing payments. The price of monthly lease installments are based on the depreciation, or wear and tear, placed on the leased car during its lease term. The dealers’ anticipated depreciation values are always less than value of financing payments. Obviously, depreciation on a vehicle will always be lower than the total value of the car, except for the unlikely event the leased car is totaled.
Car leases carry fewer responsibilities than other options do
Many people prefer to purchase or finance a vehicle because ownership transfers to the party who pays for it. Total, complete ownership is transferred, with no limitations or loopholes. However, these people fail to recognize the detriments that accompany total ownership.
Those who own cars are responsible for repairs, maintenance, and general upkeep. Not only are such fixes time consuming; they are expensive, too!
Lessees simply return their leased cars to dealerships, or whoever the lessor is, to receive repairs and regular maintenance. Lessors are generally on the hook for the cost of repairs, labor, and finding storage space for the broken-down vehicles. To make leasing even sweeter, leased cars are required to be under active warranty. Lessees are usually fortunate to have their leased cars under both manufacturer and dealership warranties simultaneously.
Lessees are usually entitled to replacement cars when being repaired
When cars need repairs, they are either unable to be driven or not advised to be used. Lessees are entitled to cars of equal or greater value to use in the interim while being repaired. Those who own or finance cars must use another car they own, use their legs to transport themselves, or ride public transportation.
Financed vehicles require expensive down payments
People with financed cars must provide a hefty down payment to ensure the lender they will, in fact, finish out payments. Lessees are subject to inexpensive security deposits before driving their cars off the lot, typically far cheaper than down payments.
Leasing is associated with less sales tax than purchasing or financing
Sales tax on cars is based on the amount paid for them. People who finance cars must pay sales taxes for every monthly installment. Car owners are required to submit sales tax for the entire purchase price of their cars. Only four states in America require 0% sales tax for vehicles, with the other 46 requiring sales taxes up to 7% of purchase price. Lessees pay sales tax for each monthly installment. Remember that leases only last a few years, if not less than one year, making sales taxes throughout lease life far less than purchases or financed vehicles.
Lessees never have to worry about reselling their used cars
Few car buyers derive enjoyment from driving older, used cars. Older cars do not function as well as their newer counterparts, nor are they as attractive. As such, used car owners often seek to sell their then-used vehicles years after purchase to recoup a portion of their initial purchase price.
Used car markets are generally not receptive to cars that are priced fairly. Those interested in used cars seek bargain deals, often haggling down vendors to unreasonably low prices. To make matters worse for car owners, cars must have had regular upkeep performed throughout their lives to command a resale price at least partially reasonable.