When we get to our favorite car dealer, we climb out of our old car and pause for a moment to take in the large or even vast selection of shiny cars, row upon row of vehicles, whose only job is to transport us in style.
We are met in the lot and guided around by a pleasant agent of the dealer, whose only job is to make our experience pleasant. He or she gently explores our desires and answers our every question including did we want to buy or lease?
Perhaps we are caught unaware. We did not think about that. He asks if we have considered the various models sold by this dealer, the passenger capacity, the fuel mileage and all the other features of the various cars.
By now we are inside the showroom and our guide explains the benefits of leasing a new car. He explains the price structure and the lack of stress when leasing one of their vehicles. There is no stress to negotiating the price or the financing. There are no surprises, no hidden fees. Based on our credit score, the monthly leasing payment is the same for all. Oil changes and maintenance checks are included without charge. For a small monthly payment, a protection package of road assistance, towing and repair is available. We need never fear breaking down on the road again.
The lease payments are lower than when buying the same vehicle. We can put nothing or little down. We will be driving a new vehicle for less money than it would cost to buy one and we will always have a nearly new car with that new car smell. And lower payments may allow us to add features or lease a better car.
Buying a new vehicle gives the new owner a sense of independence. It will require a down payment of roughly 20 percent of the purchase price. There are not many of us who have ready cash of 20 percent of a recent year vehicle. Learn to negotiate and be prepared to walk away. Surveys have found that financing through the dealer results in much higher interest rates than through banks and credit unions.
There is no restriction to mileage with a purchase while leasing is limited to a maximum number of miles over the terms of the lease. Exceeding the mileage limit results in high mileage charges, but most people stay within that limit.
Lessors are responsible for keeping the car in original condition or pay for body repair while owners can modify the car at will. Of course when you look for a buyer, they must buy the modifications as well and this may impede the deal. Equity is built as payments are made even though as the car ages, its value decreases. But it is up to the owner to decide whether he will keep it when payments are done or not. By then it will have lost its new car smell.