When leasing a car, it is almost like taking out a loan but a little easier on your wallet. In leasing (or financing), you borrow the entire value minus any down payment, and pay back the remaining amount owed. Whereas when taking out a loan to purchase a car, conversely, will require you to pay back the entire value of the vehicle, not just the balance. Having a stellar credit score isn’t always a must, but it is important to have a good enough score for a leasing option. It’s okay if you are working towards eliminating debt, as there are a lot of dealerships that are willing to work with all kinds of scores. Try searching for a dealership that offers leasing specials on cars between the $5,000 and $10,000 range, as these dealerships might be more willing to offer you a deal.
When weighing out the options for leasing or financing versus buying a car, you may want to take a look at some of the benefits:
• With making leasing payments, your vehicle gains more value until it’s eventually all paid off, and because you’re paying the entire remaining balance of the vehicle, you’ll be done sooner and can choose to keep the vehicle or opt for a trade-in;
• You often have little or no down payment required when leasing and you can drive off the lot in a high-priced, well-stocked car that may be a little more difficult to afford;
• You may find yourself driving an older model of a vehicle, which is usually covered by a manufacturer’s warranty (you may want to ask about this to be sure); and,
• The myriad of repayment options or sales specials some dealerships are willing to offer just to get you to sign with them.
You can also consider leasing a gently-used car that is about three or four years old. Cars that are a few years older than its market release date can carry up to a 50% cut off the initial price tag. In financing a used car, though, you might find yourself having to handle any future issues or repairs so it might help to get prepared with a car report. It may save you from having to shell out thousands of dollars at a time just to keep your vehicle running!
At first glance, buying may seem like the more appealing option than leasing since it is considered to be a “better” financial path; but it’s important to note that your monthly leasing payments and routine vehicle maintenance will be, overall, typically lower. Leasing gives you the freedom to enjoy a car headache-free for a couple of years, then keep it or trade in for another if you wish. When you choose to lease, you’ll have the security of going into your purchase armed with enough knowledge to make a confident decision and knowing your leased car will have the desired longevity you need.