There are a number of reasons why auto leasing your next car is a smart choice. For a while, leasing was considered to be the best option – by far. Over the past several years, there seems to have been resurgence in the desire to purchase vehicles outright. This largely stems from people wanting to eliminate a monthly lease payment by paying for a car upfront. The problem is that most people simply can’t afford to purchase a new car without a loan. In the end, the real comparison is whether getting a loan or leasing is the best option. Here is a quick look at some of the most commonly reported benefits to auto leasing your car in comparison to getting a loan for a new car.
- Lower Monthly Payments
The first reason why auto leasing your next car is a smart choice is the average monthly payments that you will be making. Leasing companies tend to offer much lower monthly payments than a lending institution. Additionally, with a lease you will rarely have to cover the insurance payments. Leasing companies will often purchase a minimum level of insurance for you since it is really only there to protect their assets. When you combine both of these factors, your total monthly payments tend to be much lower with a lease.
- Consider It a 3 Year Test Drive
When you get a loan for a vehicle, you are stuck with it regardless of whether or not you are happy with it a year or two down the road. When you lease a vehicle, you are essentially getting a 3 year test drive. If you like it after 3 years, then you can simply purchase it outright for the remaining balance. If you don’t like it, then you can get a lease on another vehicle for another 3 years. This ensures that if you ever do decide to purchase a vehicle, you will know exactly what you are getting.
- You Are Not Stuck With a Depreciating Asset
Another reason why auto leasing your next car is a smart choice is because it allows you to avoid purchasing an asset that will quickly depreciate. New cars tend to lose a lot of their value extremely quickly. Once you drive off the lot, it will never be worth as much as when you purchased it. When you lease a vehicle, you don’t have to deal with this loss of value because you don’t own the vehicle. You are essentially renting it for a few years and can give it back.
- Minimal Upfront Expenses
When you get a loan for a new car, there is a good chance that you will need a fairly substantial down payment. In most cases, lending institutions prefer that you have a down payment of at least 30% of the new cars value. With a lease, you may need to pay a few thousand dollars upfront, but it is still much less than the down payment required for you to secure a loan. Along these same lines, when you lease a vehicle, you don’t have to pay any up front sales tax. Additionally, if you do decide to purchase the vehicle once your lease is up, you only pay a sales tax on the remaining value of the car, not the original price.
- Gap Coverage Has Become Standard
Another benefit of leasing a car is the gap coverage is almost always included. One of the biggest potential risks that you face when purchasing a new vehicle is that if you get into an accident 6 months or a year after your purchase and your vehicle is totaled by the insurance company, you can end up losing a lot money. This is because your car has significantly depreciated in value which means that your insurance payout will not cover the remaining balance on your loan. Gap insurance was created in order to prevent this situation by offering to cover whatever your remaining loan balance is. When you lease a car, this is included to ensure that you don’t have to keep paying a lease for a vehicle that you no longer have.