When you’re in the market for a new car, it often takes more than just shopping the lot. A few decisions await. Is it time to go with a hybrid? Do you want a sedan, crossover, coupe, or SUV? Have you hit that point in life when a sports car is a necessity? Is reliability a factor? What about comfort or safety? Maybe technology is a need?
Once you pick the make and model, you’ve got one more decision: whether to lease a car or purchase one outright. The conclusion comes down to your priorities, as there are just as many pros (and cons) to leasing a car as to buying one. What works for you won’t necessarily work for another person — and vice versa.
The Pros and Cons of Leasing vs. Buying a Car
While terms and conditions will vary by dealer, leasing a car generally comes with several advantages — many of which can make the idea of a lease more appealing than taking out a loan to finance the purchase.
Lower monthly payments
If you’re looking at a newer or high-end vehicle, a lease often offers more affordable payments.
Lower maintenance costs
New cars come with warranties. If your lease lasts just three years, your investment in maintenance will likely be minimal.
Drive the latest models
If you’re someone who “needs” the latest iPhone, the same may be true with cars. Every few years, you’ll be driving a new one.
No trade-ins necessary
When the lease is done, you just return the car. No haggling over how much the car is worth.
Potential tax deductions
If you’re leasing the car for your business, you can deduct both the financing and depreciation during tax season.
Peace of mind
There’s something to be said about driving a new car. Rarely if ever will something go wrong — especially something major.
Option to buy
At the end of the lease, you always have the option to buy the car. This, too, can come with lower monthly payments due to depreciation.
Of course, there are a few downsides to leasing a car. Even with the lower monthly payments and fewer maintenance costs, there are things to consider before moving forward:
Making a habit of leasing a car means you’ll never be without a car payment.
Leases limit the amount of miles you can put on a car. Go over, and you’ll pay anywhere from 15 cents to 25 cents per mile at the end of the lease.
If you’re hard on cars, a lease may not be a good option. A lot of dents and dings can come at a cost.
Though some maintenance is covered by warranties, there are things you’ll have to pay for. Blow a tire, and you’re on the hook for the expense.
Hopefully, you’ve done your homework before leasing a car. If not, turning it in before the lease ends will come with termination fees.
How to Lease a Car
How to lease a car is a fairly straightforward process. If you’ve done your research and set your budget, only a few steps remain.
1. Test drive
As with the purchase of a new car, you’ll want to take some test drives before leasing a car. Visit a few dealers to narrow down your selection. Make sure to call ahead to see what’s available on the lot.
2. Negotiate terms
You’ll want to negotiate the price of the vehicle and how much you’re willing to put down. But other terms should be discussed. Go beyond monthly payments and look at mileage limits, additional fees, maintenance responsibilities, and so on.
Even more important is whether you’re signing a closed-end or open-end lease. Closed-end leases mean nothing is due upon the car’s return other than any mileage overages or wear-and-tear.
With open-end leases, you may owe additional money upon the car’s return if the residual value is less than the fair market value of the vehicle. This can leave you on the line for a huge payment at lease end.
3. Compare offers
Comparing offers is just as it sounds. Take the time to compare what different dealers are offering in lease programs.
Leasing a car can be a viable and attractive alternative to purchasing. You can often get more car with lower payments. Just be sure it makes sense for your life.
To get started, contact the team at Chaparral Ford for more information.