Buying a new car is an overwhelming task. You have to consider a lot of factors because you will probably keep the car for years to come. For car buyers who want a little bit of flexibility when shopping for a new car, car leasing is a great idea.
In fact, a recent survey found that more people are leasing cars than ever before. If you are like most car owners, you might think that this isn’t a good idea. But as much as purchasing a car has its own advantages, it’s always not the best option for everybody. Leasing has its advantages too.
On that note, here are 6 great reasons to lease a car.
6 Benefits of Leasing a Car
1. A Lease Protects You Against Loss
A car lease is like getting life insurance or putting a stop on a stock. It protects you from the negative effects of deteriorating market conditions. This means that if the car’s future value were to depreciate more than the anticipated value because of a failed economy, abundant inventories, or new models, you will be protected against the loss if you are leasing your car.
2. You Don’t Have to Deal with Resale Hassles
Once you are done with a leased car, you simply return it to your dealer and life goes on. You don’t have to worry about finding a willing buyer or haggling with creepy online strangers on Craigslist.
Moreover, you won’t have to take a financial hit when selling your once expensive automobile at a throwaway price as a result of depreciation.
3. Car Leases Can Be Expensed for Businesses
If you use a leased car for business, you can enjoy several tax write-offs including a portion of financing and depreciation costs that are included in your monthly payments. Such deductions might not be available for people who fully purchase a car with a loan.
Consult with your accountant and see how your leasing may offset some of your business costs. However, it’s important to note that some leased luxury cars might qualify for fewer tax deductions.
4. Leased Vehicles are Always Under Warranty
In most cases, leases run for 36 months which is way shorter than most car manufacturer warranty periods. Some manufacturers will also offer complimentary maintenance services for the first few years, while others will give you the option of buying a pre-paid maintenance package.
This means that you don’t have to worry about repair expenses when leasing a car.
Car Leasing versus Buying a Car
In some instances, buying a car may be a better option than leasing one. Here are some limitations of leasing:
1. No Ownership (and still responsible for maintenance and repairs)
When leasing, the car is not yours but you are responsible for any repairs that are not covered by the warranty. Moreover, when you turn in the car after the lease term elapses, you won’t benefit from any investment you made into the car.
Leasing a vehicle also means that you can’t modify it in any way. This means that you can’t add a spoiler, custom body paint, stereo system, or anything of the sort. And if your dog nibbles on the upholstery or your child spills paint on the seats, you will have you pay for the “wear and tear” when you eventually turn in the car.
2. A Car Lease Contract Doesn’t Change (even after an accident)
In the unfortunate event you get into an accident and the car gets totaled, you will be responsible for paying back the full amount of the lease contract even if your insurer gives you less money.
If you are going for the leasing option, ensure you get a gap insurance package to covers the difference that you would owe your dealership.
3. A Lease Restrains Your Mileage/Year
A car lease contract typically has mileage/year limits. If you continue to use the car even after it has exceeded these limits, you’ll have to pay extra for every mile.
In most cases, the miles are limited to 10,000-15000 miles per year and it costs about $.20-$.25 per every extra mile. This can be very expensive if you do not plan and budget appropriately.
Choose a Car Lease Type that Works for You
There are two main types of leasing: open-ended and closed-ended. An open-ended car lease means that you agree to purchase the leased car when the contract’s term elapses. Businesses and people who are always on the road often use this type of car lease.
Close-ended car leasing, on the other hand, means that you will turn in the car after the lease period and walk away. If you have gone over the mileage/year limits or have damaged the car in any way, you will have to pay for them. If not, you have no additional obligations.
Go for the lease method that has the lowest risk depending on your situation. Use an online car lease calculator to find what works for you.