10/18/2017
Afraid to lease? Check out the article below...Leasees are ~72% of our customer base.....
Benefits of Leasing a Car
Leasing a car is similar to financing in many ways, but there are some key differences. When you are purchasing a car, the loan value is based on the entire cost of the vehicle, minus your down payment and trade-in value. When leasing, however, you’re only financing the depreciation that occurs during the lease term (most commonly three years), plus fees. At the end of the lease term, you simply return the car to the dealership.
So, unless you pay a tremendous amount of money down, or your trade-in had a high value, a monthly lease payment will be lower than a monthly loan payment. With the car lease, you only pay the difference between the car’s price and what it’s expected to be worth at the end of the lease, which is known as its residual value.
It’s helpful to look at some numbers. Say your dream car is a new SUV that costs $30,000, you’re able to put 10 percent down ($3,000), and don’t have a trade-in. You’ll need to finance $27,000.
With any lease, there will be a predetermined residual value. Let’s say, for our example, that it’s 55 percent, or $16,500. That means you’ll only make payments on the $13,500 worth of use that you’re expected to get from the vehicle. That’s half the price of the outright purchase. It’s not quite that simple – both types of deals generally come with fees that need to be included in the math – but that gives you an idea of why lease payments are generally lower than financing payments.
If you only have a small down payment saved up, leasing may be a good option. Car leases require anywhere from zero to several thousand dollars up front. Many of the best new car deals are advertised lease offers that promise low monthly payments, although some require high down payments. Just like with an outright purchase, the more money you put down, the lower the monthly payment.
Leases are a good way to have a predictable total cost of ownership. Many leases last about three years, or the length of a typical new-car bumper-to-bumper warranty. That means the car is usually covered under warranty for unexpected repairs during the lease. You’ll still need to maintain the car, though, which includes oil changes, tire rotations and recommended maintenance from the manufacturer. Maintenance is even more important for a leased car than a purchased one, as failure to properly maintain and document service for the car during the lease can result in fees at its termination.
If you enjoy having the newest high-tech and safety features, leasing could also be the better choice for you. With leasing, you can get a new car every few years, and each one will have the latest and greatest technology and safety features. With a leased car, you don’t have to worry about selling the car or getting a good price for your trade-in. When the lease is up and you have followed all the rules about mileage and maintenance, you can simply turn in the car and walk away.
