The first questions most people have when looking into payment options on a new vehicle are what exactly is a lease and is it more advantageous for me to lease as opposed to finance? Leasing a vehicle is different that outright purchasing. You don’t need large sums of cash down nor do you need a personal loan – you simply drive off in a new car with little to no down payment required and then make set monthly payments for the duration of the lease on the new vehicle.
Leasing a vehicle has it pros and cons. While leasing generally results in a lower payment, at the end of the lease term you will have to make an decision on what to do with the vehicle, unlike when you finance and outright own the vehicle at the end of the term. At the end of the lease, your options include purchasing the vehicle for the price stated in your lease agreement, you can turn it in with no further obligation (other than paying for any damage and mile overage), you can trade the lease in to purchase a new vehicle, or you can trade the vehicle in and lease a new vehicle – many companies will waive any remaining payments or mile overage if you go with this option.
Here are a are a few factors to think about when deciding between leasing and buying a car:
Leasing a car allows you to drive a pricier, newer car for less money
- You have access to drive a new car every 2 to 3 years depending on the lease term.
- Many lease deals include oil changes and other maintenance covered under the lease, including the vehicles manufacturers warranty.
On the other hand, buying a car gives you:
- Flexibility to see the car anytime you want.
- Unlimited mileage
- You will only be tied to a payment for the duration of the loan and then be car payment free.
- You can customize any feature of your vehicle.
As you can see, there are many factors to consider when determining if leasing is right for you. A few side questions to ask yourself would be:
How many miles do I generally drive each year? If the answer is less than 10,000, then you would make a good candidate for a lease.
Do I want a car that I can customize to match my tastes as far as tinting, color, stereo equipment, etc.?
Do I want something I can keep for the long haul or do I prefer to have a new vehicle more frequently?
Am I okay with having a car payment for the long foreseeable future?
Reviewing the options and asking yourself those questions could be the key to deciding whether a car lease is right for you.