The big question is, “Is leasing right for me?” The answer is easy, and not so easy. There are pros and cons to any type of vehicle financing. But if any of the following fit for you, it might be worth keeping an open mind, looking at all finance options for your new car, and seeing what makes the most sense. As we discussed, people lease for a variety of reasons. Here are a few of the most common lease customers, but this list is by no means comprehensive.
- If you like to get a different vehicle every 2 to 4 years, it’s probably worth your time to look at leasing. If you fit this category, and hate the hassle of determining trade-values (and then hoping that value is more than you owe on the car) you definitely need to consider leasing. At the end of your lease, you may or may not have equity in your car (kind of like a loan, right?), but unless you have driven more miles than you paid for, or have damage or abnormal wear-and-tear (even if you do, it’s just a few cents per mile, or the cost to bring the car back to normal), you will never be in the position where you owe more than your vehicle is worth at the end of a lease. The lease company assumes all responsibility for any negative equity!
- If the car that really fits your wants and needs carries more monthly payment than your budget can handle, again, it is probably worth considering the lease option. Often, the lease payment is more affordable than the loan payment, and at a lower interest rate. Then, at the end of the lease term, you have the option of continuing to make a similar monthly payment until the car is paid in full. This works just like a loan, but with the option in the middle to decide whether you want to keep that vehicle, or get another.
- If you drive a lot of miles, and need to replace your vehicle every few years, leasing may provide the best way to control the cost of high-mile driving. Yes, your monthly payment is higher than it would be for a low mile lease. The way this works is: the lease company charges a certain amount (usually 12-15 cents per mile) for each mile over 15,000 miles per year. The thing is, it is the same cost per mile if you drive an extra 500 miles or an extra 5,000 miles! For many vehicles, a car that is only a few miles over normal is barely effected in value. But if that same vehicle has a great deal higher than average miles, it often won’t sell unless the price is drastically reduced. Leasing can keep a high-mile driver from taking that value hit, and still replace the vehicle every few years.
What it comes down to is that people lease for a variety of reasons. My advice, in most cases, is keep an open mind. When you have selected your new car, have the dealership run both loan payments and lease terms, in order to make the comparison. It’s always a good idea to have all the facts before making a purchase of this magnitude. If the lease can save you some money, save you some hassle, and make the process easier for you, you just may find yourself to be like me – a lease customer.
I hope this information is helpful. Don’t be afraid to check with me if you have any questions. And as always, happy shopping!
Mankato Motor Co.