Buying a car can be expensive, especially if you want to buy a new one. Even if you make a significant down payment, your monthly payments can still stretch your budget. However, there is a way to get into a new car more cheaply. Leasing is a good option to consider, one that has many advantages over buying, with few drawbacks.
Lower monthly payments
The biggest reason to lease a car rather than buy is the lower monthly payments. Because you are only paying a portion of the car’s full cost, your payments are considerably lower than if you are paying for the whole car. For example, the monthly payments on a three-year lease would typically be $100-$200 lower than the monthly payments on a five-year loan to buy the same car. That is a significant amount of money saved each month.
Lower maintenance costs
Another big advantage of leasing is lower maintenance costs. Though you still may have to pay for routine maintenance such as oil changes and tire rotations, because you will have the car for only two or three years, you will not face costs such as buying new tires, getting a timing belt changed or having transmission or brake fluid changed.
You have a warranty
One of the great things about leasing is that lease periods generally match up with about how long the warranty lasts. Most new cars have three-year bumper-to-bumper warranties, and most car leases are three years or less. That means the car will be covered by warranty the entire time you are driving it, which means you are unlikely to face any large repair bills.
You get new features
Cars change rapidly in today’s high-tech world, with new safety, entertainment and comfort features coming along every year or two. If you own a car for several years, it will become obsolete quickly. Leasing allows you to get a new car every two or three years, which allows you to keep up with these changes and always have the latest technologies.
Cars are subject to sales taxes, which can add a couple thousand dollars or more to your already-expensive new car. And you are required to pay taxes on the full price of the car, either up front or in your monthly loan payments. With a lease, however, because you are only paying a portion of the car’s cost, you only pay sales taxes on that partial cost. So, for instance, if your lease requires you to pay $12,000 of the $30,000 purchase price, you only pay taxes on $12,000. At an 8 percent sales tax rates, that’s a savings of nearly $1,500.
Drawbacks to leasing
There are some drawbacks to leasing that you need to consider before making a decision. One of the biggest drawbacks is a restriction on the number of miles you can drive. Most leases restrict you to 10,000 or 12,000 miles a year. That isn’t a lot if you travel a lot or have a long commute. Other drawbacks to leasing include needing a high credit score and having to keep the car in very good shape.
If you are thinking about a new car, you definitely should consider leasing over buying. Leasing has a number of advantages, including a lower monthly payment, that make it the superior choice.