The Benefits of Leasing a Car

Leasing a car can be an excellent alternative to purchasing one. Although leasing instead of buying has many advantages, car leasing is not for everyone. It is important to consider your personal situation in regards to the pros and cons of leasing a car.

What are some of the benefits of leasing a car?

Low Monthly Payments: Since you do not pay for the full value of the vehicle that you lease, monthly payments for a leased car are 30-60% lower than for a purchased car. In addition, you do not pay extra interest each month in order to invest in ownership equity.
No Down Payment: When leasing a car, you have the option of not paying a down payment up front. Some promotions for low monthly payments may require a down payment.

More Vehicle Options: One of the most important benefits of leasing a car are monthly lease payments are usually lower than loan payments for a purchased vehicle. This means that a luxury vehicle can usually be leased for lower monthly payments than it would cost to make loan payments on that same vehicle. In fact, many leased luxury cars have lower monthly lease payments than loan payments on less expensive economy cars.

Less Maintenance: Although leased cars still require a certain amount of regular maintenance and care, the manufacturer’s warranty usually falls within the term of the lease. This means that if there are any damages or maintenance issues, the repairs are normally covered.

Lower Taxes: In Canada and most states in the United States, the consumer is not required to pay sales tax on the entire value of a leased vehicle. You only pay tax on portion of the value that you use during the term of the lease. Not only that, but the tax is divided into monthly payments instead of being paid all at once.

No Selling Required: This may sound irrelevant, but one of the main benefits of leasing a car are not having to worry about selling the car down the line. Many car owners are faced with the burden of selling their used car at one point or another. When you lease a car, the headache of selling a used car is eliminated because you simply return the leased car once the lease term has ended.

GAP Coverage: Many car leasing companies will include free GAP insurance which pays off your leased car in case it is totaled in an accident or stolen. Normally, regular car insurance will not fully cover the value of the vehicle. Loans for purchased vehicles do not normally include GAP coverage so it must be purchased separately. This is one of the more unknown benefits of leasing a car in Glendale CA.

What are some of the disadvantages of leasing a car?

Early Termination Fees: If you terminate your lease contract before the end of the lease term, you will be charged a termination fee. If you end your lease at the end of the lease term, you will avoid the unnecessary and high termination fee.

Mileage Overage Charges: There is specific mileage allowance set in your lease contract, and if you exceed this allowance you will charged at a per-mile rate. This rate ranges from $0.10-$0.30 per mile, which may not sound like much until the miles start to add up. If you know you will drive more than the allowed mileage stated in the contract, you may choose to increase the mileage limit at the time of signing. In this case, many leasing companies will refund the extra unused miles at the end of the lease term.

Excessive Maintenance Fees: If you return a leased car at the end of the lease term with excessive damages that would not be considered normal wear-and-tear, you will be charged for the repairs. Most car leasing companies will specify what is considered excessive damage, so you can get the repairs done to avoid extra maintenance fees.

Higher Credit Score Requirement: Car leasing usually requires a higher credit score than purchasing with a loan. If your credit is not very high, a security deposit or large down payment may help you in getting approved for a car lease. One of the benefits of leasing a car in Glendale CA though are that a higher credit score will get you much better leasing rates for lower monthly lease payments.
In general, one of the main benefits of leasing a car is the financial savings that are achieved by little to no initial cash investment and low monthly payments. Although there are tons of benefits of leasing a car, those benefits should be weighed against the disadvantages. If you are unsure about leasing a car, it is important to do your research and ask your local dealer all the questions and concerns you have prior to making a decision.