If you love the smell of a new car and being the very first person to drive one off the dealer’s lot, then leasing a vehicle may be the way to go for you. If you have never leased a car, the process can seem complicated and created more for businesses, who can take the tax deduction for their expense, or individuals who simply can't afford the higher car payments. But in reality, there are many benefits to leasing a car instead of buying
Leasing a new car is very similar to renting it for a period of time, only rather than pay for it in one lump sum, you simply make a small down payment followed by a series of monthly payments. A car lease lets you drive a new vehicle without paying a large sum of cash or taking out a bank loan. Once your leasing term is up, you simply return the car. Leasing agreements are usually only available on new cars and typically last from between two and four years.
- Ownership - At no point during your leasing agreement will you own your car – it remains the property of the leasing company, even after your last payment. Since you don’t own the car, you never have to worry about selling it or trading it in for a newer model. When your car leasing agreement has finished, you must return it to the leasing company. In this respect, it’s similar to renting a home – you have sole use of it, but it’s still owned by the landlord at all times.
- Warranty - Because leasing deals tend to be offered on new cars only, most leased vehicles will be within the manufacturer’s warranty period, meaning it’ll be covered by the same manufacturer warranty as if you’d bought the car outright. Similarly, should the car break down, it’ll be the responsibility of the leasing company to resolve the issue. Most new car warranties last around three years, so, if your lease agreement is three years or shorter, your car will be covered for the entire term of the lease. Make sure you check on this before signing the lease agreement.
- Maintenance - A manufacturer warranty will cover your vehicle for any unexpected breakdowns, but you will still need to make sure it’s serviced following the manufacturer’s recommendations. Optional maintenance packages should be available for you to purchase, so make sure your salesperson goes over these plans with you.
- Insurance - You are required to insure a leased car in the same way you ensure any car. Make sure you factor this cost into the amount you have budgeted for leasing your car.
Most leasing agreements come with a set of requirements that the car must meet when the lease period is over. If you go over the mileage that is stated in your initial lease agreement or return it with excessive wear and tear you may have to pay a penalty charge, so be mindful of those terms throughout your lease.
If you like to change your car every few years while always driving the newest cars on the road, leasing could be the best option for you.