Leasing is often misunderstood by drivers who haven’t been through the process. It’s a simple process that makes a lot of sense once you fully understand how it works, and it’s a great option for many drivers. Buying is easier to understand since it’s something most drivers have done in their lifetime, but the long list of benefits associated with leasing isn’t fully recognized by car owners. Before you sign on the dotted line to buy that new car, educate yourself on the many benefits of leasing vs. buying.
Leasing Provides Guaranteed Cost of Ownership
When you drive a new car off the lot after buying it, you don’t know what the cost of ownership might be. You’re already thousands of dollars in the hole after driving it off the lot thanks to depreciation. Now you worry about what happens when your warranties are over, and what you might have to pay out of pocket to purchase a new car when this one no longer works for you. With a lease, you know your car will always be covered under warranty because you turn it in before the warranties are up. You know you won’t be upside down when you buy a new car, and you know it won’t cost you anything else.
The only con to this is if you drive more than the allotted mileage. Most leases allow you to drive anywhere from 9,000 to 15,000 miles per year with an agreement you’ll pay approximately $.20 per mile for any additional mile. It adds up fast, and it can cost thousands of dollars when your lease is up if you exceed your mileage. This makes leasing a great option for people who don’t spend much time in their car, and it’s not a great option for drivers who do.
Leasing is Less Expensive Than Buying
When you buy a car, your monthly payment is enough to equal the entire purchase price of the vehicle as well as taxes, fees, and interest. When you lease a car, your payments equal the amount of depreciation of the vehicle and little else. For example, let’s say you want to purchase a $60,000 vehicle. The monthly payment before you consider interest on your 5-year loan is already $1000 per month to purchase. If the lease offer allows you to drive away for $600 per month with excellent credit, you’re paying approximately 25% of the value of the vehicle and cutting your payment almost in half.
It’s a great way to afford a bigger and/or more expensive vehicle. The monthly payment is less, you don’t owe money on your vehicle when you turn it in, and you get to drive away without being upside down and unable to get out of your lease.
You Get A New Car Every Time Your Lease Ends
No one loves driving an old car, but everyone loves to get a new car. If you lease, you will guarantee yourself a new car every two to three years when your lease is up. This comes without the hassle of finding a new car you can afford based on how much you owe on your current vehicle. You’ll always drive a new car, and that offers substantial peace of mind.
Driving a new car that’s always under warranty is a big draw. However, it’s driving a car that’s not going to leave you in a financial bind that makes leasing a wise decision. If you keep low miles on a car, you should consider this a more viable option.