Have you ever wondered why people lease a car?
There are many benefits to leasing a car and the majority of them outweigh the benefits of buying a car. When you lease a car, you are getting a great deal and the ability to drive a car that is brand new. You may even be surprised to find that leasing will help you to save money.
If you’ve been wondering whether or not to lease a vehicle, these reasons may help you make your decision.
By looking at each of these benefits, you can compare them to buying a car. Figure out which benefits will help you the most and use them when deciding on which lease option will be best for you.
1. You Don’t Need a High Credit Score
One of the biggest things that people consider when they are looking at new (or new to them) cars is their credit score. Some people won’t even go to a dealership if they think that their score is too low to be able to get a vehicle.
With a lease, you will still be required to have a decent credit score but it will not need to be as high as what you would need for purchasing a car. You can get a nicer, newer and better car with a lower credit score when you make the decision to lease a vehicle.
2. Your Credit Will Increase
The simple act of having a lease will increase your credit score. Since it is different from a car loan, it will help you to build credit in different areas.
While we aren’t necessarily credit counseling experts, it is easy to see that a diverse credit profile will increase your score. Banks and other loan companies like to see that you can handle a variety of different types of payments and having a car lease on the report will help to increase your score.
Not only will simply having it on your report help you to increase your score but making your payment on time will also help you. It will appear just like any of the other bills that you have so make sure that you pay it on time to avoid marks on your credit report for a late payment on the lease.
3. The Monthly Payment Will Be Lower
If you take two of the exact same vehicle that have the exact same list price on them and compare them side by side depending on the payment options, you will see that using a lease is much less expensive on a monthly basis. A lease can be as much as 100 dollars less than the payment on a car. It is a good idea to look at your own budget to figure out how much money you can afford for a car and then use that to help you figure out whether you should lease a car.
Once you have looked at the lease option, compare it with the monthly payment on buying the car. If the payment for buying is something you can afford, it will definitely be less expensive to lease it. This may even allow you to get a bigger, better or more expensive car. The lower lease payment, if you choose that option, is something that will help you to reduce the amount of money that you have in your budget for a car so that you can use your money for other things that you may need to be able to purchase.
4. Scratch The Down Payment
Most people who purchase a car normally have to pay a down payment. These can get expensive and not everyone is able to pay such a large sum at one time (even if you can afford the regular monthly payment). With a lease, there is no down payment required most of the time.
The only time that you will probably see a down payment is if you are using a credit rebuilding program for the lease of the car. The down payment with this type of program is still less than the down payment that you would expect to pay for the purchase of a new car.
While you probably will not be required to pay a down payment, you will still need to pay the first month’s payment on the lease. This is generally only a couple hundred dollars, at the most, and something that you should be able to afford. The other thing that you will need to play when you are leasing a new car is the tax, title and registration fees as these cannot be calculated into the lease based on regulations that are set up by the government.
5. Cosigners Can Be Helpful
Even if you are not able to qualify for a lease on your own, you can get a cosigner to help you with the lease. Since the credit requirements for the lease are lower than the requirements for buying a new car, your cosigner will not need to have as high of a credit score as he or she would to be able to purchase a new car. Having a friend or family member cosign for you is so much easier with a lease thanks to the less stringent requirements of credit score for the leased car.
If you are a cosigner on a lease, it is also a lower risk than being a cosigner on a purchased car. Most of the time, there are certain things that are associated with leasing so that you will not be at as high of a risk if something were to happen. There are many options that are in place to help protect cosigners with leases so make sure that you are aware of all of these before you make the decision to not cosign on a lease.
6. New Cars Are A Possibility
If you’ve been driving around in the same car that is ten years older than you, you may think that driving a brand new car sounds like a dream come true. Lease options make driving a brand new car a possibility but they also make it so that you can do it often.
Most lease options are between two and four years. This means that you will be able to drive a brand new car every two or four years depending on the type of lease that you have chosen. It makes it easier for you to get a new car and to keep up with all of the latest trends that are on the road.
As long as you have help up your responsibilities of your lease, it is very simple to trade out for a new car every two or four years. The process is as simple as turning your car back into the dealership and getting the new one of your choice. Often, your payment will stay the same. If you want to stick with the same model, that is helpful but you can also upgrade to a different type of car. Leasing a luxury car is something that most people choose to do so that they can enjoy the benefits of it without the hassle of buying it.
7. You Won’t Be Burdened With Extreme Maintenance Bills
When you are driving a used car or one that you own outright, you will have to pay for all of the maintenance bills. While it is not uncommon to see a used car or a purchased car get free basic maintenance (think oil changes and car washes), most people can’t get their engine work done for free.
Since you’re leasing a brand new car, you’ll be able to get the benefits of the manufacturer’s warranty on the car. If something goes wrong with the vehicle, it will probably be covered by the manufacturer and you’ll be able to get the car fixed at very little to no cost to you. Be sure that you look at the details of your lease before you just assume that something will be covered.
One thing is for sure, though, you will have far fewer car maintenance bills than you would with a used car.
8. The Tax Isn’t As Expensive
Although you will still be required to pay the registration, fees and taxes on a leased vehicle, the tax is much lower than what it would be with a brand new vehicle that you are purchasing outright. There are certain laws that determine the amount of tax that can be charged on a leased vehicle.
Most of the time, you will only be required to pay a portion of the tax that is assessed on the car. This is because you are not expected to have the vehicle for the full life (or value) of the car. You will only be responsible for the tax that you would pay on the portion of the life of the vehicle that you are going to be able to use. This is something that is usually just a small amount of money but can make a big difference.
Most people would be happier with paying 50 dollars for the tax on a vehicle than they would be with paying 300 dollars for the tax on a vehicle. The difference in the money that you will save can be as much as a single car payment.
9. You Don’t Have To Sell And Buy
When you want to buy a new car, you will probably need to sell an old car to free up space in your drive way or make the down payment on the new car. With leasing, you don’t have to worry about that. The lease will allow you to simply bring the car back to the dealership, pick out your new car, sign some paperwork and be on the road. There is no haggling, no dealing and no waiting months to find someone who is willing to pay 2,000 dollars for your 1993 Accord.
The lease option is not only more affordable but this makes it more convenient. You will be able to easily get into a new car when the lease period is over. If you really love the car that you have and you want to be able to enjoy the benefits that come along with it, you can purchase the car outright at the end of the lease term. Usually, this amount is lower than the market value of the car so that you will be able to save money in that aspect to.
Either way that you end your lease, it is easier and more convenient than trying to sell a used car.
10. The Insurance Aspect Is Better
While you may pay a slightly higher insurance premium on a leased car, you can expect to save some money in other areas. For example, most leased cars come with gap coverage. This means that, if your car is totaled, you will get the full amount that you owe on the car to pay it off instead of just the value of the car. This is a great coverage option that anyone with a leased or loan-purchased vehicle should have (it is relatively inexpensive and can save you thousands).
Gap coverage with leased cars is easy, though. It generally comes with the car so that you don’t have to put the gap coverage on your insurance.
No matter what type of car you have, you’re purchasing or you dream of getting, you should consider the option of a lease. Having a lease can help reduce the amount you spend on a car, can allow you to afford a luxury vehicle and can provide you with all of the opportunities that you need to make sure that you are saving as much money as possible.
If you want to discuss leasing options or learn more about our leases, contact us today!