Leasing can be as mysterious as the savings that appear in the short-term when you lease a car. Keep this thought in mind. Leasing is the best short-term way to save money and still drive a beautiful car that you’re proud of. Over the long-run, it can be a bit short of buying in terms of overall value, but that doesn’t mean leasing is the lesser of the two options. On the contrary, if someone is on a strict budget and simply can’t afford to buy a car that they truly love, it’s a waste of money to buy a car, commit long-term, and then be stuck with it at the end of the payments. That’s not the only reason to lease a car, though. There are many great reasons.
1. No down payment: It’s possible to get a no down payment lease, freeing up money in this short-term arrangement. This works well for people who are just starting out in life and trying to amass security. In the mean time, you can get an extremely nice car without having to finance or cut into your monthly budget to come up with extra cash. This doesn’t mean you don’t pay anything up front. You do pay first month’s leasing bill plus registration and tag fees. Other than that, though, you don’t have a down payment.
2. No worrying about how to sell the car: Thanks to the short-term arrangement of a lease, you don’t get stuck with a payment on a car for a decade or more. When the lease is up, you don’t have to worry about re-selling the car. You simply return it. There’s flexibility on this issue as well. When a lease is up, you can usually work out an arrangement to buy if you desire to.
3. GAP Coverage: If your car is totaled or stolen, you’ve got some coverage here. If your insurance doesn’t pay the total amount, then the GAP coverage kicks in and pays the rest of it, meaning you’re not responsible for any part of the fiasco.
4. You pay for only some of the vehicle cost: Unlike buying, you’re not going to pay the total price of the car in order to drive the car. That’s because you won’t own the car at the end of it. Why pay for all of it? This is one of the best perks of leasing.
When is buying okay?
In some cases, only buying a car will be acceptable to customers. The instances where leasing isn’t right are few and far between, but they do exist.
1. You plan to drive the car a lot: If you commute 30 miles to work and back a day, have an active driving life, and don’t want to be limited in your driving, then buying will be the better option. This is because when you lease a car, you have a set number of miles that you can drive it per year. If you go over, there are fees. High mileage households won’t want to lease.
2. You believe in ownership: Since you don’t own a leased car at the end of your lease, people who are determined to own what they pay for will not want to lease. Keep in mind, though, that owning a car you’re not satisfied with is sometimes worse than leasing short-term and then having more options later.
3. You have credit issues: It’s more difficult to be approved for a lease than it is to be approved for financing to buy a car. People who have credit troubles will have difficulty leasing, so be sure to check your credit score and see which option is best for you.
Making the big decision
These few factors help determine whether leasing a car or buying a car is more beneficial to you. A financial adviser can shed some light on the situation as well. For the most part, leasing is the best option in cases where you drive low mileage on the car, want a much nicer car for lesser monthly payments, have better credit, and aren’t dead set on ownership. If you fit this attitude, leasing is king.