When you are deciding whether or not to lease, you need to consider the pros and cons of leasing a car. Let TopCarLeaseDeals.com give you a crash course on everything you need to know about leasing.
First you need to understand is how leasing works.
Lease prices are determined by comparing the Capitalized Cost of the new vehicle to its Residual Value. The Capitalized Cost refers to the final sale price of the vehicle being leased. The Residual Value refers to how much that vehicle will be worth in terms of resale value when you return the vehicle to the dealership at the end of the lease.
Every new car begins to depreciate in value once it is driven off the dealership lot. The amount in which it depreciates determines its Residual Value. An $18,000 vehicle that is leased for 36 months and depreciates a total of $3,000 over those 36 months retains a Residual Value of $15,000. Your lease payments will reflect this $3,000 amount.
New Car Leasing Pros
- Less of a commitment, most lease terms last 24 to 36 months and then you can return the vehicle.
- Lower monthly payments. You are only paying the difference between the Capitalized Cost and the Residual Value.
- The Manufacturer’s Warranty often covers the vehicle for the entirety of the lease term, this means no out of pocket expenses for normal maintenance or repair fees.
- Down payments are often low and sometimes there is no down payment required.
- You can experience driving brand new vehicle that may usually be out of your price range if you were to try to buy since lease payments are lower.
New Car Leasing Cons
- Leasing often has higher finance charges.
- Leasing contracts restrict you on the number of miles you can drive per year. This is usually somewhere between 12,000-15,000 miles. If these miles are exceeded you can experience charges that can be as high as 25 cents per every mile over.
- You don’t gain ownership equity over the vehicle.
- Wear and tear penalty fees can be added at the end of your lease if you do not take care of the vehicle.
The choice is not a simple one. If you are looking for flexible ownership options and the ability to drive a brand new vehicle every couple of years, leasing is a great move. If you would prefer a long term commitment and enjoy ownership equity, then buying is more for you.
Requesting a free, no obligation lease price quote can help you do further research on any make and model you may be interested in. We have direct access to the lowest lease prices across the nation and can locate the best leasing incentives as well.
Request a lease price quote today to see how cheap your new lease can be!
