If someone needs to drive a vehicle, he or she is going to have to choose to either buy or lease a vehicle. This article will explain why leasing is a better option for almost everyone.
One of the major benefits of leasing is that a person doesn’t have to worry about problems with the car or repairing these problems because the car will be under factory warranty for the term of the lease. Every problem or accident that a person has with a purchased car will eventually cost him or her money. Some car companies will even include oil changes and tune-ups with a leased car to save money for the person who leases.
Another great feature of leasing is that the leasee will know exactly how long they will have a car and will not have to deal with the hassle of selling a car.
A potential purchaser who wants to buy a new car every few years will save substantial amounts of money not having to deal with the transaction costs (including the potential purchaser’s time) of selling a used car by leasing. Leasing a car also reduces the amount of initial due diligence needed when leasing because the car is no longer a concern to the leasee at the end of the lease term.
Another advantage of leasing is that there will be a reduced monthly expense for leasing a car compared to buying a car. If a person is currently on a tight budget, his or her money will obtain a much better car for the same amount of money by leasing. According to LeaseGuide.com, around 75% of luxury cars in the US are leased. If a person wants a luxury car, leasing is the best way to easily obtain a luxury vehicle. Also if a person wants the newest auto tech and upgrades, leasing can make it possible.
Many car loan companies will not loan over a certain amount, so leasing for many may be the only option to obtain a luxury vehicle. A leasee is also much more likely to not need a down payment in contrast to a purchaser. A lease will also give a person the benefit of a stable monthly cash outflow for a vehicle instead of the variability of repairs when purchasing a used vehicle.
A lease also gives more flexibility at the end of the lease term. With a lease, the leasee has an amount written into the lease contract that states how much the leasee can pay to purchase the car. Whether to buy or move on is completely up to the leasee. If a person does not have much car experience, leasing a car can give he or she experience with a brand of car before making a long-term commitment.
Another positive to leasing over buying is that leases have automatic GAP Protection. GAP Protection helps the leasee when the leased car is either stolen or destroyed. In the event of the leased car being either stolen or destroyed, the leasee is covered for the amount that he or she owes on the car. When buying, the purchaser does not automatically have this protection and can end up owing substantial amounts of money for a car he or she cannot drive any longer.
If a purchaser invests his or her money and has potential business opportunities, buying a car will tie up the purchaser’s capital in a car which is similar to a depreciating savings account. A purchaser who has investments or other higher interest such as credit cards should lease and allocate their capital to maximize his or her returns. Over the short-term, tax burdens through leasing a car are less than purchasing. In particular, in many states, the leasee only pays sales tax on the part of the car that is being financed. Another plus is that leases in certain circumstances can be tax deductible for a leasee who owns a business.