Almost every vehicle owner at one time or another has considered the option of buying or leasing a new vehicle. There are several factors to consider in determining if you are a good candidate and if you are financially beneficial, but the difficult task for a first time tenant is to narrow it down to the main criteria when it comes to leasing, especially from current research. shows that more than 25% of all new cars that roll off the dealership lot are leased vehicles.
There are several indisputable reasons why leasing versus buying has its merits. Lower monthly payments, high-end model selection, minimal maintenance costs, the latest technology, and improved safety features are all the benefits that come with a new vehicle. However, despite all the positive features just mentioned, the deciding factor that should ultimately lead to a decision, according to a recent article by Jerry Reynolds, the Car Pro, to lease vs. buy, is the number of miles the potential buyer anticipates. driving the vehicle per year … 17,500. According to him, that’s the magic number, and it will certainly be a debatable topic for discussion in the car leasing industry. Anything less may not be practical depending on your use of the vehicle, and something greater may end up costing you excessive fees.
If you expect to put in more than that, then you should consider buying the vehicle and forget about the lease. If you really are a low-mileage driver, then leasing has its benefits. You must not lease for more than three years or exceed the factory warranty, that is, 24 months or 24,000 miles; because during the term of the lease you are not anticipating any major mechanical or maintenance costs such as timing chain replacement, tire replacement, air conditioning repairs, transmission repair, or major engine repairs … just regular maintenance, such as required fluid changes, filter replacement, traction rotation, etc. If your lease exceeds the factory warranty, mechanical repairs will be out of pocket. If you exceed the mileage allotted under the lease, then you will be required to pay the excess mileage fee, which can be as high as 25 cents per mile, depending on the terms of your lease.
If you decide to lease, ignore the option to buy the car at the end of the lease term, as you are clearly defeating your intended purpose of leasing a vehicle. Plus, you’ll end up paying considerably more for the car than if you had bought it outright. It is also in your best interest to lease from a dealer versus any third party leasing company due to the availability of lower interest options from the factory. Another supporting reason is that third-party leasing companies tend to inflate their costs for higher profit margins, since they bought the vehicle from the dealer to begin with (as you are) and may also try to entice you to consider a lease term of more than 3 years or exceed the warranty.
Dealerships have made leasing so attractive now with our current economy that if you are a consecutive cycle renter, they will put you back on the market to buy a new car every three years (or sooner depending on the term of your leasing contract). allowing the distributor to increase their purchase of inventory from the manufacturer. Current car statistics indicate that the average car owner who bought their vehicle has held it for 5 years or more depending on the source they use, so the dealer drive to lease can be understood by volume of inventory. Distributors would like to see you on their premises as often as possible.
If you decide to lease, read the lease carefully, fully familiarize yourself with the terminology, and make sure you fully understand your obligations. We’ve all heard horror stories at one point or another about the victims of leasing. Personally, I am not an advocate for leasing because I enjoy the privilege of owning a car, but for many, it may be their best option. If you know what you are looking for and can negotiate wisely, then leasing may be a good deal for you.