When you go to purchase your next car, you have a few options. One of these is leasing a car. While not all consumers fully understand what it means to lease a car, it is often viewed as an attractive alternative to buying and for good reason. To determine if a lease to own program is right for you, it’s important to first understand the benefits of leasing a car.
Low Monthly Payments
One of the biggest benefits to leasing a car is the ability to lock in a low monthly payment. The reason you have a lower monthly payment when you lease a car versus buying one is because you don’t invest in ownership equity each month. This simply means that you’re only paying for a portion of the value of the vehicle. This usually makes your lease payments between 30 and 60 percent lower than financing a car.
When purchasing a new car, it’s generally recommended that you get GAP insurance. The goal of gap coverage is to cover the difference between the value of the car and how much your insurance will pay in the event you are involved in an accident. Lease agreements typically come with GAP protections. Dealerships do this for their benefit since they still technically own the car, but it benefits you as well.
More Car for Less
In the same realm of having a lower monthly payment, you also get to enjoy more car for less. Consumers generally have an estimated monthly payment that they can afford. This means that they’re locked into getting cars that fit within that budget. If you can get a car for a cheaper monthly payment, you can suddenly look into getting cars that were originally outside your price range. For many consumers, this means gaining access to a newer model of car.
Another benefit to leasing a car is that it’s less of a tax burden. Most states don’t require you to pay taxes on the entire value of lease vehicles. If you buy the car straight out, you have to pay taxes on the entire car. When leasing, you’re only taxed for the portion of the value of the car while it’s under your lease agreement.
Small to No Down Payment
You don’t always have to make a down payment when you’re leasing a car. You do have to make the first monthly payment and pay for all of the registration fees upfront, but this is often way less than the down payment you would need to make when buying a car. That being said, there are some promotional deals that require you to make some kind of down payment to take advantage of the deals. However, these down payments are still cheaper than the alternative of financing the car straight out.
Avoiding the Hassle of Used Cars
Lastly, you get to avoid the used-car hassle. When you own a car, you typically sell or trade it when you buy a new one. When you lease a car, however, you simply return it to the dealership, and you’re done. You have the option to buy or trade in for another car to lease, but it’s all up to you in the end.