In spite of its surging popularity, numerous misconceptions about vehicle leasing remain:
Misconception #1: Leasing a new car costs far more than buying it.
Leasing can actually cost less in the long run. Besides the lower up front costs and monthly payments of leasing, consider the economic power of money that's not put into the down payment and large monthly payments on a purchase deal. Investing that money or buying down debt could put you ahead financially, compared with tying up money in a vehicle, which is losing value.
In addition, most leases offer GAP insurance, which covers the difference between the lease payoff and the insurance settlement if the car is totaled or stolen. This is usually not available when you buy a vehicle.
Misconception #2: There's equity in buying, but nothing at the end of the lease.
Buying a new car is not typically a good investment, since the vehicle depreciates. Its value may be considered equity only if the amount owed on the loan is less than its value.
Leasing offers the potential for cash value at the end of its term as well--by keeping your equity out of the vehicle. The cash flow derived from no or a lower down payment and lower lease payments during the life of the lease, together with interest, can produce an amount roughly equal to the used vehicle's value at the end of a conventional loan.
Misconception #3: A lease consigns you to always making payments.
Auto Leasing Basics
By Brennan Howe Theres a shiny new Pontiac G6 parked in your nextdoor neighbors driveway. Standing proudly next to it is a gleaming new Jeep Grand Cherokee. This is the second time in four years t..
By Brennan Howe Theres a shiny new Pontiac G6 parked in your nextdoor neighbors driveway. Standing proudly next to it is a gleaming new Jeep Grand Cherokee. This is the second time in four years t..
At the end of most leases, the contract entitles you to buy the vehicle at a set price. If you choose not to, you can just walk away. Had you purchased the car, you would be stuck with selling it or trading it in, at a price that may not meet your expectations.
Misconception #4: There are additional expenses at lease end.
If all requirements concerning vehicle condition and mileage are fulfilled, there is no further obligation at lease end. You may simply walk away, purchase the vehicle for a predetermined value or lease another vehicle.
Misconception #5: Excess wear and tear charges are unfair.
Regardless of leasing or buying your vehicle, you would face the same financial hit for wear and tear. The lease contract just puts that reality in black and white.
Misconception #6: Early termination fees exact a heavier penalty than changing your mind when you buy a car.
Whether you lease or take out a loan, the decision to bail out early comes at a price. If you purchased the vehicle, the loan balance may be far more than what the car is worth. If you leased, the vehicle may be worth far less than its residual value, particularly if you made no down payment. The lessor uses the early-termination fee to compensate for that loss.
Misconception #7: It's a mistake to lease if you put high mileage on a car.
High mileage takes its toll whether you lease or buy. When you buy, the cost comes as a lower trade-in value. When you lease, your cost is out of pocket when you turn in the car. To avoid such an expense at the end of a lease, PROLEASE will structure your lease to your driving habits using a realistic number of miles over the right number of months.
Buy or Lease Which Automobile Transaction is Better
By Chris Contessa When individuals are considering buying an automobile they are often faced with the dilemma as to whether they should buy or lease the car. There are pros and cons associated with e..
By Chris Contessa When individuals are considering buying an automobile they are often faced with the dilemma as to whether they should buy or lease the car. There are pros and cons associated with e..
Misconception #8: Leasing only makes sense for vehicles used in business.
The Tax Reform Act of 1986 removed the incentives for individuals to purchase their vehicles, since buying no longer offered deductions for sales tax and consumer interest. As a result, leasing is definitely a viable option for personal use drivers who change vehicles every few years.
Misconception #9: The only way to dispose of your current vehicle when you lease is to sell it yourself.
ProLease can secure the best possible price for your trade-in vehicle at no cost to you.
Auto Lease Responsibilities
About the Author:
ProLease Auto Lease specializes in luxury auto leases and domestic and foreign cars, both new and used.
