When it's time to shop for a new car, many questions will follow: New or used? Sedan or SUV? Feature-filled or simple? Dealership or private seller? These are only a handful of the many questions you will need to ask yourself before making a final decision in the car-buying process. This doesn't even include all of the finance decisions to make. One, in particular, being to finance or to lease. Just as with everything in life, there are pros and cons to each. While many shoppers think buying is the ideal way to go, leasing is also a very good route too. So what does it mean to lease and car, and what are the pros and cons? To learn more, continue reading.
What is Leasing?
In many ways, purchasing (or financing) and leasing a car are similar. But there are some key differences to be aware of. When purchasing a car, the loan value is based on the entire cost of the vehicle, minus any down payment or trade-in value. When leasing a car, you are only financing the depreciation that occurs during the lease term (typically three years), plus fees. Further broken down, this means that when you lease a car, you are only paying the difference between the car's price and what it's expected to be worth at the end of the lease. So unless you put a tremendous amount of money down, or your trade-in value is high, leasing a car will provide you with a lower monthly payment than that of the monthly loan payment you'd get when purchasing.
The other main difference between financing and leasing a car is this: when you finance a vehicle, when any loan you have ends, you officially own the car. When leasing a vehicle, when the lease runs out, you can either finance the vehicle based on the remaining price of the car, or you can turn in the keys and walk away.
What are the Requirements of Leasing?
Just like when financing a car, leasing a car comes with some requirements. One is that in order to lease a car, you will need anywhere from zero to several thousand dollars up front. The more money you put down, the lower your monthly payment will be.
Another requirement when leasing a car is that you will have to maintain it. This means staying up-to-date on oil changes, tire rotations, and any manufacturer-recommended maintenance. Failure to properly maintain and document service for a leased vehicle can result in fees owed at the end of the lease.
Along with keeping a leased car in good condition, you will also be required to stay within certain mileage restrictions. Exceeding the allotted mileage during a lease will also result in penalty fees when the lease ends.
What are the Pros?
As already discussed, leasing a car has some pros, like lower monthly payments. Another is that you are given access to a continuous supply of new cars and all the latest and greatest technology and safety features.
If you like predictability, leasing a car is a good way to get it. Yes, you will still need to maintain a leased car with regular automotive services, but since most leases last three years, you will likely be covered by a new-car bumper-to-bumper warranty, which also typically last or three years. This is a good way to have a predictable total cost of ownership during the time of lease.
What are the Cons?
While leasing a car eliminates the risk of boredom because you are always able to return the car at the end of a lease, then able to opt for a different leased car, this can actually be a con for some. Instead of ever becoming a true car owner, you are really just renting a car for a few years until the lease contract comes to an end.
Another con of leasing is that if you don't keep the vehicle in excellent condition, you will be charged for it at the end of your lease. So, if keeping things in prime condition isn't your forte, leasing may not be the correct path for you.
For all your leasing needs, visit our dealership in Harrisburg, PA.