Auto leasing has its advantages. Leasing is a good alternative to acquiring a nwe or used vehicle over purchasing a new or used car. Unfortunately, leasing is not for everyone. Its up to you to decide if leasing is right for you, as the core advantages of leasing are driven from your personal feelings about vehicle ownership, and your financial situation.We touched in auto leasing 101 some of the advantages of a short term lease, acquired via a lease take over (more on that in 201). However in this section we’ll get into the advantage of leasing a new car. To quickly highlight some of the key advantages of leasing which we’ll get into the details include:
- warranty coverage and vehicle maintenance
- depreciating value of a car
- cash savings
- drive your dream car…for less
- lower taxes
- less stress and financial burdeon
- cost of ownership
Waranty Coverage and Vehicle Maintenance
When leasing a car, you define the length of the lease terms, whether this be 24, 36 or 48 months. The advantage here is, unlike buying a car, you get the opportunity to tailor the term of the vehicle lease to the automobile manufacturer’s warranty coverage. By defining the lease terms in conjunction with the manufacturers warranty, reduces your maintenance costs over the term of the lease agreement. Doing so keeps you covered financially if anything major mechanical issues happen with the vehicle.
If you’ve every bought a new or used car before, you’ll relate to this issue on warranty and vehicle maintenance as its amazing how mechnical issues with vehicles seem to start just after the vehicle warranty expires. New vehicles can have re-call components, especially if the vehicle make and model are new to the market place. Keep in mind there are also disadvantages to car leasing.
Depreciating Value of Vehicles
The costs of driving a new car increasing rapidly over the years. Some may say the costs to operate a vehicle has its own inflationary value to it, as income levels increase with these costs. Considering this increasing cost, and it makes economic sense to consider leasing a new vehicle, or take over a lease.
Secondly, vehicles are known to be one of the worst depreciating investments. Buy what appreciates and sell what depreciates. Immediately upon driving your new car home, the value of the vehicle has dropped significantly. You can re-coup some of this loss in your vehicles residual value upon selling it, however it’ll likely be years before this happens. Therefore the alternative option to getting into a vehicle is to lease, which also gives you more flexibility and control over the terms of your vehicle financing.
Remember, leasing simply means you purchase only the portion you agree too use, not the life time expectancy of the vehicle – such as with buying. Therefore this means you may have a lesser monthly payments compared to the loan or financing of a new vehicle.
Save you Money
Leasing a car can save you more money in the immediate term by requirying little down payment, if any, thus reducing your monthly lease payments.
This puts more money back in your pocket immediately, providing an affordable means to get into a vehicle, while giving your more leverage to use the extra money for other financial commitments, or investments.
Its your choice to place a down payment on your auto lease to lower your monthly payment. You may even be able to reduce your monthly payments depending on how well you can negotiate your car lease deal, as some dealers may really want to make that sale quota at months end.
Next: Disadvantages of leasing a car