Advantages of Leasing a Car


The pros and cons of leasing a car largely hinge on your circumstances. In this article, we examine the top advantages of leasing, allowing you to see if these advantages fit your needs and offer the flexibility that a long-term car loan may not. It may have you asking, "Why am I not leasing?"

Whether you should buy or lease a car depends on your situation in life. Perhaps you don't want to commit to a long-term loan, or you think your car needs may change after a couple of years. Perhaps you're an older driver whose long-term health may be uncertain. In these cases and others, leasing may be the best choice, and by considering the following advantages of car leasing, you can decide which is best for you.

 

1. You don't have to commit.

What if you need to buy a car but don't know what your long-term needs are? If you're single, getting a compact coupe may suit you now, but perhaps you can envision starting a family after a few years and needing something higher.

 

2. Get lower monthly payments.

Monthly lease payments can be up to 30-50 percent lower than a car loan's payments. A car loan is a big commitment and can take five or more years to pay off. If the monthly burden of a car loan is too high, lower monthly payments of a lease might be your best alternative.

 

3. Pay a lower or even no downpayment.

When getting a car loan, people on average pay 10-20 percent down. Downpayments for leasing are lower, and you can even lease a vehicle with no downpayment. However, as with a car loan, paying a higher downpayment on your lease will give you lower monthly payments.

 

4. Drive the newest.

Leasing a new car every few years means you will always drive the newest, latest models with the most up-to-date technologies. Of course, this can get quite expensive after a few leases, but if your priority is to always have that new car smell (and the latest safety features), leasing may be for you.

 

5. A warranty can always cover you.

When purchasing a car with a loan, often your loan will outlast your warranty. Typical new car warranties last three to five years, though you may be paying off the car loan for a few years more. It's much easier to get a lease whose warranty lasts the full term, so you won't get hit
with additional repair bills while still making monthly payments.

 

6. Lower sales taxes.

Sales taxes on a purchased vehicle will be for the full price of the vehicle, but the sales tax you pay on a leased vehicle is only for the amount paid on the lease, a small fraction.

 

7. Get free GAP coverage.

Many leases offer free GAP insurance to cover you when your car is stolen or totaled, and you owe more than what the car is worth. Typically, car loans don't offer free GAP coverage. You must purchase it on your own.

 

Loan payments are usually higher than leasing because you’re paying for the entire value of the car. Lease: If you want to end the lease early you will have to pay early termination fees, which usually can cost as much as sticking with the rest of the lease’s term.

Personal Finance

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