Car leases are not a new way to purchase a new car, but they’re growing in popularity with the changing viewpoint of life young professionals embrace. In the past, families bought cars, paid them off, and drove them until they were on their final leg. It was a way of life to own a car and feel a sense of pride in that kind of financial accomplishment. Today, buying a new car means keeping it for two or three years, realizing it’s no longer shiny and new, and trading it in for a new car.
The problem with purchasing and trading in a new car in this manner is it’s not overly conducive to your financial situation. Cars depreciation rapidly the moment they are driven off the lot of a dealership, and this puts many consumers upside down on their payments. Essentially, they owe a lot more than the car is now worth, which makes trading it in difficult. Many buyers find trading in their car leaves them with three options:
– Pay off the remaining balance after realizing trade-in value doesn’t pay off the loan
– Roll over the unpaid balance into a new car and make it more expensive or even unaffordable
– Keep the car even longer while it continues to lose value as you work to pay it off
It’s easy to see this is not a wise financial decision, and that’s why more millennials are turning to the art of leasing to allow them the benefit of driving a new car every few years without the financial downfall of trade-ins and ownership.
Leasing is Affordable
Leasing is more affordable than buying a car because you aren’t tied down when the lease is up. You’re not paying monthly payments for five, six, or seven years on a lease. The standard lease is between two and three years, which means the car belongs to the dealership once the final payment is made. You get to take it back, say goodbye, and choose a new car without any financial issues with the old one. It’s also more affordable monthly because you’re not paying the entire amount of the car.
Leases only require the buyer to pay for the depreciation, which is a small portion of the total cost of the vehicle. This is how consumers are able to afford a luxury car, a large SUV, or a more expensive ride by leasing than they are able to afford when purchasing a new car.
Leasing Means Always Driving New
New cars are a novelty many people prefer. Few people keep cars long enough to pay them off these days, which is why leasing makes so much sense for the average consumer. You drive it long enough to enjoy it but not long enough to get tired of it. By the time you are in the market for a new car, your lease is up and you get one. This means always driving vehicles with warranties, and it means always driving with a sense of comfort and security. You have all the best security features, upgrades, and new technology in your car when you lease.
Of the many benefits of leasing a vehicle comes the lack of fees associated with this form of financing. You’re still applying for financing using your credit score and being approved, but you’re only financing a small amount. You’re also not paying nearly as much sales tax, dealer fees, and other fees buyers are hit with when they sign on the dotted line. It’s much more affordable for most everyone to lease provided you’re not the type of driver who puts tens of thousands of miles on cars annually. You can negotiate mileage in your lease agreement, but not to the point you put excessive miles on a vehicle. If you keep miles low, lease your next new vehicle.