Cars are among the biggest investments people make in life. Educating yourself on the options present regarding vehicle possession and use can do a lot of good to your finances. When it comes to automobiles, the two options you have to drive your dream car are to lease or buy.
Car leasing has lots of advantages and is the option you need to go for if you are working on a budget. More people are starting to appreciate the convenience involved in car leasing, and this is why a quarter of all the cars in the USA are leased. Next is a glimpse of some benefits of car leasing for you to consider.
You don’t own quickly Depreciating Property
Unlike homes and land, cars depreciate over time. If you want to go for a new car, you will have to suffer a depreciation of about 50 percent within the first ten years. New cars can even lose 10 percent of their value just by being driven out of dealerships.
Since your vehicle is not going to hold value for a significant amount of time, it makes more sense to lease it for a period. Since you will not really own the car, you don’t have to deal with the reduction in its value. With car leasing, you can opt to drive a new car every 2 or 3 years.
Leasing involves compensating the owners of the car for the depreciation that is bound to occur during the period involved, plus their profits. This is still not as inconveniencing as owning a rapidly depreciating car.
Car leasing is usually done for 24 or 36 months. Over this period, most of the payments made every month are the same.
Lower Monthly Costs
The monthly payments for car leasing are considerably lower than what you would part with to get a new car. This is because you do not end up owning the vehicle. Buying a car involves the full payment of the cost of the automobile. On the other hand, when leasing a car, you only need to pay for the depreciation of the vehicle and the fees.
For such financial arrangements, the deposit is also much lower or non-existent in certain instances. Buying a car on hire purchase will require you to pay a deposit of 20 to 50 percent, which is very high. The rest of the payment on the car will then be spread over subsequent months. The price paid on the car is always going to be more than the actual value of the asset since depreciation is very steep in the first few years.
Monthly costs in car leasing are made with regard to the residual value of the vehicle at the end of the period. The residual value is the estimated price of the car at the end of a lease agreement. Larger residual values at the end of the lease period will warrant lower monthly charges. This is part of what makes it a very cheap way of driving a car.
Afford a Nicer Model
Since you will end up saving a lot of money, you also have the opportunity to upgrade the choice of car model to drive. In addition, since you can always lease a new car, it will be possible to benefit from the better performance of modern automotive technology. The manufacturer’s warranty will cover the vehicle over the entire lease period. It also covers the maintenance cost of the vehicle.
Leasing vehicles is growing in popularity. Using this route can offer you lots of benefits, especially with regard to your finances. It is much cheaper to lease a car than to buy, and this can give you an opportunity to drive a better model. It also saves you the stress of owning property that depreciates at a very fast pace. Since it offers so many advantages, you should consider leasing a car instead of buying one.