Leasing a vehicle can be beneficial to you in several ways. Often no down payment is necessary on a leased vehicle and if one is required, it’s usually much less than when you buy. There are no fees or taxes that have to be paid before you get delivery of the vehicle as there is when you buy. Monthly payments for leasing are often only half as much as when you buy and you still have a brand new car that you can drive, enjoy and be proud of.
When you lease, what you’re really doing is renting your vehicle for a fixed number of months. During that time, you pay for using it. You do not have to worry about losing money on depreciation. When you lease, you will never find that you’ve paid more for the vehicle than it’s worth.
People often lease a car when they aren’t in a position to buy. Some leasing companies will lease to you if you’re trying to establish your credit, or even when you are trying to re-establish it after a bankruptcy. Leasing companies will often lease high priced vehicles that a bank will not approve a loan for, such as those with a price tag of more than $25,000.
If you own a business, leasing is beneficial to your business as it gives you a tax advantage if the vehicle is used only for business purposes. At the end of your fiscal year, you can write it off as a legitimate expense, plus fuel and maintenance. Be sure to check with our accountant to find out how to take advantage of this option.
Cons of Leasing
One of the drawbacks of leasing is that your car payments are never-ending. If that is something you will have difficulty accepting, then leasing may not be an option for you. When you lease you never own the vehicle, the leasing company does. You just pay for the privilege of using it. However, trends are also changing in this regard. There are a few leasing companies that will allow you to pay off the car in five years. The interest on these types of leases is very high; usually around 25% to 29%. If this type of lease is not for you, you can take a traditional lease. This means when the term of the lease expires that you will either give the vehicle back to the leasing company and lease another, or finance the remaining value of the vehicle. With the first option, you once again have lease payments. With the second, you pay a car payment every month.