What Is Car Leasing?
Car leasing isn’t the same as renting a car per se- For example, renting a car when yours is at the mechanic’s will be for a few days, while the car lease gives you unlimited access to the car for a year or more.
The Pros of Car Leasing
A car lease is quite flexible. If you find yourself in financial trouble, you don’t have to sell the car while owing the remaining balance. You can talk to the leasing company and shift to a cheaper lease. You avoid the black mark of repossession or late car payments on your credit report. If you’re constantly switching cars, car leasing is a better deal than buying a new car and then selling it after you’ve depreciated it. Car leasing can be a great choice for road warriors who drive the wheels off their cars, though you have to be careful of the mileage limits in your agreement. Because you aren’t paying off a loan based on what the car is worth, you typically have lower monthly payments than a car loan. And unlike a car purchase, there is generally no down payment.
The Cons of Car Leasing
Car leasing often requires good credit, since the contract isn’t really backed by any equity you build-up in the vehicle. Car leasing won’t build equity the vehicle. And if you are constantly getting dinged or have to turn the car in early, you’ll be hit with hefty fees when you return it.
Observations about Car Leasing
While you can’t customize the car since it doesn’t belong to you, it is easy to switch vehicles. Whether this is a switch from a BMW to a Mercedes or two door car to a four door because you just had a baby depends on you. The car lease generally includes repairs, but this depends on the contract. Read what you’re signing and understand your obligations. Car leasing allows you to afford to drive a nicer car than you could buy with a car loan
Who Benefits Most from Car Leasing?
Young adults are often the best candidates for car leasing. It avoids the horror stories of selling a car for a loss because you can’t afford to ship it to your new home cross-country or losing it for unpaid storage fees because you left it behind. If your job requires you to drive new cars, leasing may be cheaper than constantly turning over vehicles. Furthermore, a car lease gives you far more choice in vehicles than a company car. For business owners, car leases can come with a number of tax advantages. Car leasing may provide peace of mind, too, since you’re only driving relatively new cars that are going to be trouble-free assuming you do basic maintenance and stay out of accidents.
How Can You Save Money on Car Leasing?
Car leasing can be the cheaper option in a number of cases, such as when you want to drive the same car for six months while on assignment. However, it may be more expensive than a car on payments because you aren’t building equity. Fortunately, you can find car leasing deals by choosing the right leasing company. You could save money by committing to a longer rental. Choose a car lease that fits your expected usage of the vehicle, since over-mileage fees can be pretty steep. However, you won’t get credit for unused miles in the lease contract. Take care of the vehicle, since you’ll have to pay extra if there is excessive wear and tear.