Leasing is another form of purchasing a car. It’s not unlike purchasing a car with a monthly payment, but it does offer more benefits than downfalls in comparison to buying. The major difference between the two is ownership. When you pay off the loan you took out to buy a new car, the car is yours free and clear. The title is transferred out of the lender’s name and into your name, and this car is officially yours. Most new cars are financed between five and seven years, and many buyers never keep their car long enough to officially own it.
Leasing a car is like buying in that you get a new car, but you’re just borrowing it. It’s a sort of long-term rental. You don’t pay the full amount of the car’s asking price. Instead, the deal is you take the car home for a year or two and then bring it back to the dealer. The dealer then puts the car back on their lot to sell as a slightly used vehicle. They want you to keep the miles low and the car in excellent condition, and they require you to pay out-of-pocket if you’re unable to do this. You never own a lease but if you trade in your cars before they’re paid off, you never own them either.
Leasing is beneficial to those who keep low miles on their vehicles. There is room for negotiation if the standard 12,000 miles per year allowed on a lease is not enough for you. Many dealers allow you to go as high as 15,000 miles per year for a small fee paid to them each month. If you exceed the mileage, you do pay a per mile fee. This is why high mileage drivers should avoid leasing vehicles.
The primary reason to lease is cost. It’s more affordable for many drivers to lease than pay. When your lease is up, you get to go into a dealership and choose a new car without any hassle. There is no money owed on your lease, so you never roll money into a new car. It’s affordable because leasing only requires you pay the depreciation on the car rather than the full price, so monthly payments are much more affordable than when you buy. Finally, leasing allows consumers to choose from virtually any car imaginable even if they previously assumed it was too expensive. Since you’re not paying the full value of the car, the monthly payment on a high-end luxury car is much more affordable than many payments on a cheaper car when it’s purchased outright.
The Benefits of Leasing
– It’s more affordable
– There are fewer fees
– Warranties don’t expire
– A new car every few years
– Little to no down payment
People who lease are pleasantly surprised to realize most dealers require very little to no down payment at all to keep a car within their budget, and they don’t have to pay the full sales tax price on the vehicle. The warranty on a leased car will not expire while it’s in your possession, and many times the maintenance items are free of charge at the dealer.
Leasing is amazing for people who never pay off their cars and prefer to trade them in every few years. It’s more affordable, it’s easier, and it’s never going to cost you more to lease a new car than the sticker price advertised on a lease. Leasing isn’t a new concept, but it’s one that’s becoming more popular with the younger crowd.
Millennials are known to change jobs, homes, and vehicles more often than not, and that means leasing is a more viable option. You get to drive the car of your dreams for a low monthly payment, and you’re never tied to it for more than two or three years. It’s the perfect answer for those who like change or simply want to have more for a lot less. If you’re considering leasing, just be sure you aren’t a high-mileage driver. Otherwise, it’s the simplest, most affordable, wises decision for you and your financial situation.