Should you lease or buy a new car? That’s the dilemma with which most people have to grapple. While it may all come down to priorities, picking one option over the other could be smart or dumb.
So, why would anyone prefer leasing over buying a new car? Is it all about the advantage of driving a new vehicle more often? This article explains why leasing a car is smart to help you decide if that’s how you wish to acquire your next vehicle.
- Leasing a car is smart because it involves lower monthly payments and little or no down payment
- Leasing a car makes it possible for you to drive a brand-new vehicle more often than purchasing one
- Leasing a car involves a simplified process, fixed monthly payments, and fewer risks
- By leasing a car, you are protected from the risks of sudden depreciation and other costs associated with owning a car
Top 10 Reasons Why Leasing a Car Is Smart
If you’re wondering whether or not you should lease a car, consider the many benefits you may get. Even though you may not get to own the vehicle, the following are the reasons why leasing a car is smart:
1. Lower Monthly Payments
One of the reasons why it’s smart to lease a car is the lower monthly payments than purchasing it. That’s mainly due to how monthly payments for leasing and purchasing are calculated.
You’ll pay the vehicle’s purchase price plus interest when you get a car loan. The figure is then divided by the number of months in the lease term. It results in higher monthly payments.
Lease payments work faster than before. You won’t pay for the vehicle’s entire value but the expected depreciation plus interest, rent, and taxes. Depreciation is only a portion of the vehicle’s value. Therefore, the monthly lease payments are much smaller.
2. Smaller Down Payment
When purchasing a vehicle, the down payment can be as much as 20% of its value. That often represents a massive amount of money. However, you may need to make no or a small down payment ($0 to several thousand dollars) with a lease.
On a typical lease, you’ll pay the first month, title and registration fees, taxes, and acquisition fees in a few instances. The first payment is much less than the down payment for purchasing a car.
3. Driving a Brand-New Car
How about having an opportunity to drive the latest car, make and model, without necessarily purchasing it? For many people, luxury vehicles are too expensive for them to afford. However, leasing breaks down the cost into manageable monthly payments, making it possible for you to drive a brand-new vehicle every few years.
With that, you do not have to stick to an old car with outdated technology. Instead, you can use cars with the latest in-car entertainment systems, safety features, and better fuel efficiency. The good thing is that you can enjoy all these tech features without paying for the car fully.
If you buy a car, you may have to drive it for at least a decade. That means missing out on the latest tech features. Leasing a car is smart since it makes it possible to get a newer model every often. You can pick the features you like, such as paintwork, driver aids, and the best technology.
Therefore, if you often get bored with your cars quickly, leasing is your smart choice. Besides, it is cheaper and more convenient since you do not have to stay in a vehicle for too long.
4. Ability to Avoid Extra Costs
Why is it smart to lease a car rather than buy it? While updating the latest car model can impress your neighbors, it is a strategy to avoid the costs of maintaining older cars. Newer cars are just off the assembly line and experience fewer problems. Besides, leased cars are covered by the manufacturer’s warranty, making it unnecessary for you to meet certain expenses.
Plus, car dealerships often include maintenance in the car lease agreement. You get free premium tire replacement, repairs, and routine servicing. There’s also a glass protection and breakdown cover to provide an alternative vehicle if you can no longer drive the leased one.
Leasing may come with some expenses when the lease expires. They include excess mileage fees, excess damage fees, etc. However, you can avoid these charges by sticking within the provided mileage limits and driving the vehicle more carefully.
5. Simplified Process
One of the reasons why leasing a car is smart is how easily you can get yourself behind the wheel. Most dealerships and lenders have a simple process that anyone can use to get a car. You may take the following basic steps:
- Step 1: Choose a suitable car from among the latest models.
- Step 2: Get a quote from the leasing company with the expected monthly payments.
- Step 3: Apply for finance to the dealership or lender by submitting the required documents.
- Step 4: Sign the lease contract with a representative from the dealership and lender.
- Step 5: Pick the vehicle from the dealership and start enjoying it.
Besides being smart, car leasing is the easiest thing to do. If you have no issues with your credit and other requirements, you should have the contract finalized in less than ten days. With such a hassle-free process, why would you want to avoid a car lease?
6. Fixed Monthly Payments
Leasing a car involves agreeing to the monthly payments you will make over the lease term. Once you sign the contract, you’ll make the duplicate payments to the end of the lease. The dealership cannot vary the payments for any reason whatsoever.
That makes it possible to plan how much you’ll pay toward the lease. Besides, some car lease types may include purchasing the vehicle. In that case, you may end up with equity on the car.
Since the car dealership tells you what to pay before signing the contract, you shouldn’t expect changes throughout the lease. If you take good care of the vehicle and stay within mileage limits, you’ll close the lease without other financial stresses.
7. Plenty of Manufacturer’s Incentives
To know why car leasing is smart, you should look out for the numerous incentives car manufacturers provide. These incentives often result in low-cost leasing. You can find them by visiting the manufacturers’ websites and searching for special offers.
The lease deals include details on monthly payments, lease terms, and the down payment. Lenders often adjust these factors from time to time to provide favorable lease prices to current and prospective clients.
8. Protection Against Depreciation
Unlike purchasing a car, leasing is based on a fraction of the vehicle’s value. It covers the expected depreciation by the end of the lease term. But the predicted car’s value may not hold significantly if its value depreciates suddenly.
That should be the least of your worries since a sudden drop in the car’s value is the dealership’s or lender’s problem. You must make the agreed monthly payments without worrying about the vehicle’s value.
However, if the vehicle’s value on the lease expiry is unexpectedly high, you can purchase it immediately. Selling such a vehicle at a profit is the best thing to happen to you due to a car lease.
9. Zero Ownership Hassles
Purchasing and owning a car comes with many hassles. Besides the usual repairs and maintenance issues, you must sell the vehicle if you no longer want it.
Not so with a lease. You do not have to try selling the vehicle. Besides, the leasing company is responsible for the vehicle’s value at the end of the lease. The only liabilities arise if you return the vehicle too early or damage it extensively.
10. An Option to Purchase the Vehicle
After leasing a vehicle for some time, you may purchase it and become the owner. That’s a great option since you would have already tried the vehicle for a while before buying it. Besides, if the car’s value is higher than its residual value, you can buy and resell it at a profit.
The Bottom Line
Now that you know why leasing a car is smart, why don’t you try it? With affordable monthly payments, low down payment, and fewer risks, car leasing should be anyone’s top priority. The dealership or lender assumes the most significant risks on a leased car. As long as you make your monthly payments within the required time, there should be no issues. So, make the smart move!