Conventional means of car acquisition only presented you with the option of either paying cash or taking out a car loan to procure a new vehicle. Leasing was also an option but was limited to corporate customers and the luxury car buyers. Luckily, the alternative has also been extended to everyone out there in search of a car. As a matter of fact, car leases in the present days have tremendously increased due to the rising costs associated with buying vehicles. About a third of car sales are attributed to leasing since it offers a convenient way of owning a car other than taking out a car loan to finance it. Besides, it allows buyers to acquire expensive cars that they could not have afforded through cash or credit sales.
• Cost effectiveness
Leasing can be said to be complementary to financing, at least to a significant extent. However, some differences in cost do stand out. While making the purchase, the loan value is based on the full price of the vehicle less the down payment and trade in value. On the other hand, when leasing the car, you only incur the cost of depreciation that occurs not before or after but during the lease term in addition to the normal usage fees. At the end of the lease period, you just return the car to the dealer. In simplicity, a monthly lease payment is way lower than a monthly loan payment.
• Predictable total ownership cost
Most leases if not all last for about three years or the length of a new car warranty. This means that the leased vehicle is usually covered under warranty for unexpected repairs during the lease duration. It helps maintain the car hence keeping it in perfect condition for perfect operation. Maintenance is easy and less costly for leased cars, and it keeps them in perfect shape throughout the contract period.
• High-tech lease vehicles
Leasing enables you to enjoy the newest high-tech and safety features. It allows you to get a new car every few years, with each having the latest and greatest technology and security attributes. Worries of selling the car or obtaining the best price for your trade-in are eliminated with the leasing option.
Leased vehicles have distance limitations. Hence, these cars are mostly opportune for the people who do not drive a lot. Breaking on the mileage on the lease agreement translates to more payment per mile surpassed. However, the leasing agreement must disclose the distance you should cover every month and the costs associated with additional miles covered. You will, therefore, be in a position to make an informed decision when signing the car lease agreement.
• Down payments and initial fees
Fortunately, most lease agreements have low down payments. Even better, the dealer could waive off the down payment for a leased vehicle. It, therefore, suggests that you’ll have to pay less even for the sales tax on the contract. With a lower initial fee, leasing has a little impact on your finances compared to buying the car.
When it gets down to making that decision on whether to buy or lease a car, no option fits all needs. Hence, you should be cautious enough to consider all the pros, cons, and the costs involved to establish which one conveniently suits your needs. Your decision mainly relies on both your budget and driving needs.