Buying a car, especially a new one, is one of most people’s main large expenses during their lifetime, with the exception of housing costs. That is why leasing emerges as the more affordable and reasonable alternative to buying a car during these turbulent times. It might seem strange and unlikely, but let’s take a look at the facts together.
What is leasing?
In a way, leasing is like renting a car for an extended period – usually, 36 to 48 months. This has a significant advantage over putting a down payment for a new vehicle that can tie up your cash for 48, 60, or even 84 months. On top of that, the car loses value as soon as you drive it off the lot. That means you may end up paying more than it’s worth for years to come.
Why leasing is a viable option right now
As you might have concluded already, leasing is a shorter commitment than buying a car.
Besides, leases are more flexible since the contract can easily be transferred to another person without any severe financial penalties. Overall, a lease means fewer obligations in these uncertain times.
Leasing demands little or no upfront money. Unlike buying a car, you can lease one with no upfront investment. Sure, a no-money-down monthly lease payment is higher, but you might still prefer it if you are in a financially tight spot and need a car right away.
You can lease a car that is affordable to maintain and fits your needs and style. More and more compact vehicles, mainstream sedans, and small SUVs are entering the new-car lease market. This is due to the change in customers’ nature since young people prefer different vehicles than those that were the most popular just half a decade ago.
Lower upkeep costs
With a lease, you never have to worry about any mechanical failures. No matter what, you’ll be covered. The vehicle will likely remain under warranty throughout the lease period and, therefore, rarely require anything more than routine maintenance.
Leases generally run for two to four years, and when they expire, you are eligible to sign a lease on a new car. When your lease is up, you don’t have to go through the time-consuming resale process. You can jump right into a new leased vehicle and avoid all the hassle of selling.
Compare this to a situation where you own a car past its warranty expiration. The costs of all repairs fall on you. Also, excessive mileage and wear and tear will harm your car’s resale value, and you’ll be responsible for trading or selling your used car if you want a different one.
A New Car Every Few Years
For many people, there’s nothing like the feeling of driving away in a brand new ride. If you’re one of the people who feel this way, leasing may be the way to go. When the lease is up in a few years, you can return your old car and get it replaced with a brand new car.
Additional tax reductions
If you live in the United States, another advantage worth considering is the fact that a lease will often afford you more tax write-offs than a loan as long as you use the car for business purposes.
The IRS allows you to deduct both the depreciation and the financing costs that are part of each monthly payment. Keep in mind, though, that the amount of tax reduction could be limited if you are leasing a luxury car.
Leasing protects against sudden depreciation
Leasing is based, in part, on the predicted value of the car at the end of the contract. But in today’s world, nobody truly knows what the vehicle will be worth in a couple of years. So if the value of the car unexpectedly drops, it doesn’t concern you.
On the other hand, if the car’s value is unexpectedly high at the end of the lease, you have the option to buy the vehicle yourself and can even earn money by selling it.
Benefits for the car manufacturers
Automakers also benefit by leasing a significant portion of a car’s production.
Leases help keep used-car supplies steady, which in turn boosts resale values. A high resale value means a vehicle is slower to depreciate, which leads to cheaper leases for that model. In the long run, that benefits consumers as well.
Furthermore, when customers return their car at lease-end, it gets them into the dealership in person. That is when the dealer has the chance to move them into a new vehicle, which an off-lease customer needs as soon as possible. In the end, everyone profits from this type of deal.
After all, money isn’t the only factor you should consider before you put your signature on a deal. Your taste and lifestyle should also play an essential role in deciding to buy or lease a vehicle.
Leasing a car is, in many ways, similar to renting an apartment. At the end of it all, you do not own the car unless you choose to buy it. There are limits to the customization you can do, often even on the mileage that you can drive during a month.
Some leases include only 10,000 miles or fewer but offer a lower monthly payment. Fewer miles and a lower price might be a better fit for many people, primarily if you work from home or if that becomes the new normal.
Remember that you are still responsible for regular upkeep, maintenance, and the minimum amount of auto insurance required in your state.
However, there are many advantages to leasing a car compared to taking out a loan to buy one, as you have seen. Go ahead and visit your local car leasing company to see if something they have to offer satisfies your needs. Now is simply not the right time for a long-lasting financial commitment, so if you need a new ride, give leasing a shot. You might end up liking it so much that it becomes the new way for you to make sure that you’re always riding the best and the newest car possible.
Michael has been working in marketing for almost a decade and has worked with a huge range of clients, which has made him knowledgeable on many different subjects. He has recently rediscovered a passion for writing and hopes to make it a daily habit.