As you watch television, you’ll likely see a few commercials from major auto manufacturers talking about leasing a vehicle. While you can purchase a car, truck or SUV, leaving often makes a lot more sense. If you prefer driving a brand new car every few years but can’t afford the cost of outright buying one, leasing lets you get the vehicle that you want for less. There are some simple and smart reasons why you should lease a car.
When You Want to Save on a Down Payment
The cost of buying a new car is quite high, which is why dealers give you the option of putting down a specific amount of money and financing the rest of the purchase over time. Once you factor in the interest rate on your loan, you may find yourself spending more money than you ever intended. Leasing a car lets you save on the overall cost of the car as well as the down payment. You can usually put down a smaller amount to lease a car than you could when buying that car.
You Drive Less
It often makes more sense to lease a vehicle rather than buy one when you drive less often than others. When you buy a car, you are responsible for that vehicle. As you put more miles on the engine, you risk damaging that engine, which may require an expensive repair. When you lease a car, your contact will state exactly how many miles you can put on that engine each year and over the course of your lease. If you go over the maximum amount, you face fines and penalties. Those who drive less will find that they can drive a leased car for years without ever going over.
Leasing a car also makes sense for those who use their personal vehicles for work purposes. When you buy a car and take out a loan, you cannot deduct any of your loan costs on your income taxes, but you can make deductions when you lease a car. As you file your taxes, you can list the percentage of time that you use your car for work purposes and deduct a portion of your lease. You can also make deductions relating to general maintenance on your leased vehicle too.
A common misconception that some have about leases is that once you sign a contract, you can never leave. This is what experts refer to as a locked lease because the lease essentially locks into place once you sign on the dotted line. The truth is that you can actually opt for leases of different lengths based on how long you want to drive that car. A typical lease will run for around three years, but you can sign up for a short-term lease that lasts for just two years or a single year. You also have the option of signing a contract that lasts for five years or longer.
The interest rate you qualify for when applying for a car loan depends on your credit history, including your history of paying back loans on time and whether there are any judgments against you in the past. Even if you have good or almost perfect credit, you may still receive a higher interest rate than you would like. After factoring in the extra money that you pay over the course of your loan, you’ll likely pay more than you ever expected. Leasing a car lets you save some money because most leases have lower monthly payments.
Both the size of the down payment you have in hand and how much you can afford to spend each month will determine the type of car you can buy. Shopping for a new car can be extremely frustrating because many shoppers find that they do not qualify for a new model with all the bells and whistles. With leasing, you have the chance to get a car that costs more than one you could actually afford to buy.
Another benefit to leasing a car is that you have the option to buy that car later. You can usually get that car at a great price too. The moment you take a new car off the lot, the value of that vehicle drops. Depreciation applies to leased cars too. When your contract ends, you can turn that car back in to the dealer. The dealer will look at its condition, mileage and other factors to determine its total value. You may find that the dealer will knock more off the price based on your previous payments too.
Leasing a car often makes more financial sense when you compare leasing to buying. As you look at the benefits of leasing, you may find that leasing makes more sense for you.