Leasing is a lot like buying. You get a new car. You finance a new car. You need good credit to get a good interest rate on your new car. You get to leave a dealer in a new car. You make monthly payments on a new car, and you eventually trade in or sell your car for an even newer car.
Buying means you get to keep the car as long as you’d like. It’s yours forever, or it’s yours for a year. Leasing means you keep your car for a pre-determined amount of time, which typically falls anywhere between two to three years depending on your lease contract. When you are done driving your purchased car and decide to turn it in, you are given a trade-in value for the vehicle. If you didn’t put money down when you bought the car, your car is probably not worth what you owe. This means you get to pay off the difference yourself, or you get to roll it over into a new car loan. This makes new cars even more expensive, and it often means buyers are simply unable to buy a new car right away.
When you lease a car, you get to drive it until the lease is up. Then you turn it in, and then you choose a new car. You owe nothing. You need not pay off anything. You needn’t roll over any additional money from this car to your new car. With a purchased car, you can put as many miles on it as you want. The only thing that happens when you do this is you cause the value of the car to drop if you put too many miles on it. If you lease a car, you’re required to keep the mileage low or risk paying a per mile fee for every mile you drive in excess of the pre-determined mileage in your lease agreement.
The Benefits of Leasing
Unlike buying a car, you get to have a new car every few years with a lease. There is no risk of causing more financial debt in your life by trading in a car and rolling additional money into a new one, and there is no financial risk to leasing. Since many people trade in their vehicles every few years as it is, leasing is a great option for you to keep new cars in your driveway all the time.
You never lose warranties, either. When you buy a car, your warranties expire once you reach a certain number of years or a certain number of miles. Leases aren’t in your possession long enough for this to occur, which means you always have a car covered under warranty in case something happens to the car.
Finally, you pay far less for a lease. You’re not paying for an entire vehicle, so you get to pay a lot less. This means choosing from a larger pool of potential vehicles, because cars outside your budget suddenly become affordable when you lease.
If you’re a consumer who likes the idea of a new car every few years, leases are for you. If you are a consumer who likes the idea of always having a warranty in case something does occur with the car, you are probably going to enjoy a lease. If you want to drive a car that’s far too expensive for you to purchase, a lease might allow this car to fall well within your car budget. It’s a situation in which the consumer wins, and that’s what makes leasing such a beneficial concept.