Owning a New Car: 4 Reasons Leasing is a Good Option
The path to car ownership can be a rocky one for many people and few people get it right the first time—especially when buying a new or fairly new car. Most would-be car buyers are put off by the high costs involved and feel that they have no choice but to get an older car. But leasing opens the door to owning a new car and we’ll explore the option below. After reading you should understand the process, its benefits and be able to make a choice on its benefits to you.
The Fundamentals Of Leasing
When you buy a car on higher purchase you essentially take ownership of the car on the understanding that you will pay for it over a specific period of time. Once the loan is repaid, the car is yours. Leasing on the other hand, is different. Whilst you do pay a certain amount each month, ownership of the car doesn’t pass once the fixed lease period is passed. At the end of this period you are given the option to buy the car. You are under no obligation beyond this period and so whether you buy or not is completely up to you. The crucial difference between buying (higher on purchase) and leasing is that the latter option leaves you without ownership of an asset.
So why would anyone want to lease a car? Here are a few of the key benefits:
1. You Pay Less Upfront For More
A typical leasing arrangement involves either a brand new car or a car that is nearly-new. The cost to lease such a car however is very little compared to the outlay of buying it either cash or on higher purchase. In a typical hire purchase arrangement you’d need to come up with a substantial deposit before you can drive the car off the lot. Leasing allows you to drive a new car without the huge initial outlay of cash. With leasing you essentially pay a ‘rental’ charge for use of the vehicle. This rental charge is based on the estimated cost of depreciation over the life of the lease. Many experts believe that this option is a more efficient way to spend cash now since buying a car will result in a decline of value over time anyway.
2. Leasing Allows You To Maintain A Higher Social Status (For Less)
For many people it’s a dream to own a new car. Leasing allows for that dream to become a reality and with it the possibility to enjoy the social trappings that come with driving a new car. But there’s more to it than that. Those nifty new features (built-in navigation, Sirius XM radio and the latest crash-proof technology) can be experienced first-hand. These are features most people would never get the privilege of enjoying otherwise.
3. Huge Savings On Repairs
A newer car comes with fewer troubles and even if things do crop up, they are usually under manufacturer’s warranty anyway so getting them fixed is easy as pie. You also save money on insurance as they too (insurance companies) will factor in the lower cost maintain the vehicle into the premium.
4. Short Leases Allow For Faster Upgrades.
On average people drive a car 4 – 6 years before they part with it, by which time the car has depreciated so much they get little or nothing for it. Gone are the days when most cars had a certain built-in premium and held value; today a car drops 10% off its value as soon as you drive it off the lot. With leasing you can have leasing periods as low as 2 – 3 years. This gives you the option to drive the very latest make or model in a quicker time than the average car buyer.
For all those benefits outlined, leasing isn’t for everyone. If you do decide to go down that route, take a good look into your long term goals and use the tips above to help you make a sound decision.