Why do so many people lease, rather than buy, their vehicles? Let’s find out the benefits of leasing a car to determine the answer to that question.
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What about Monthly Car Lease Payments?
When you lease a car, the payments end up being lower than for a purchase. Why is that? Instead of paying the full value of the car, you pay for the portion used each month. Choose the lease term that best suits your budget and lifestyle, and as a bonus, streamline household budgeting since you pay a fixed amount each month. If you are a skilled negotiator, you could end up driving a new car and paying no down payment, no security deposit, and no bank or dealer fees.
Love New Cars?
If you love driving a new car, and want that privilege every couple of years, leasing is tailor-made for you. Just pay a few low out-of-pocket expenses, and drive your new car off the lot. Enjoy the use of it for 24 to 36 months, and then turn it in, and repeat the process. What could be easier? Did we mention that you “walk away” at end of most leases? There may be a small turn-in fee, but there are no hassles, and no vehicle to dispose of.
What about Tax Benefits?
In 45 states, you will have realized a tax advantage from leasing as taxes are on the monthly payment versus the cost of the car. Your lease payments may be a write-off, as the IRS may allow a percentage or the entire lease payment amount as a write-off. Additionally, in some circumstances, the operating expenses for the vehicle may qualify you for a tax exemption, but check with your accountant to be sure.
Hate Expensive Car Repairs?
Nothing wrecks a carefully balanced household budget like expensive and unexpected car maintenance bills. Additionally, individuals depend on reliable transportation to enable them to work, and time-consuming repair jobs could translate to a major loss in income.
Because most lease terms are shorter than car loans – 24-36 months versus 60-72 months – leased cars typically remain covered by the manufacturer’s warranty for the entire lease term. What does that mean to you? It means no expensive repairs or time lost from your job.
Need to Establish Credit?
Leasing a car is a low cost finance alternative for many individuals who are trying to establish their creditworthiness. This can be an excellent way for students, newlyweds, and others who are just starting out, to make a major purchase with few out-of-pocket expenses. If this aspect of leasing interests you, but you are not sure you are old enough to lease a car, please read “Legal Age to Lease a Car.”
As mentioned earlier, the fixed payment amount makes budgeting easy, and the lower payment amount enables individuals to afford the vehicle. At the same time, the short lease terms mean less commitment, and if individuals find themselves unable to make payments, they can transfer it, or terminate the lease early.
Want a Status Symbol?
Finally, leasing a car is the best way to get the most car for the least amount of money. Always dreamed of driving a Jaguar? Check out the difference between a purchase and lease.
As we have discovered, there are many compelling benefits of leasing a car, but leasing is not the right answer for everyone. It is great for the individual who takes fastidious care of his vehicle, and never misses an oil change or tire rotation, but for those who are indifferent to regular maintenance chores, the excessive wear and tear on a vehicle costs them more at lease end. The same holds true for those in occupations, like sales, which require extensive driving. The excess mileage charge could make a leased vehicle cost prohibitive. The bottom line? Analyze your lifestyle to see if leasing or purchasing a car is the best option for you. If you are wondering what happens if you wreck your leased car, read “Answering Your Question: What Happens to a Car Lease if You are in an Accident?”
www.Kiplinger.com, “Five Myths on Leasing a Car,” Mark Solheim, 02/2008, accessed 08/17/2010