Car Lease: is it for you?
Cars are quick to depreciate. Your shiny new vehicle today, won’t have the same value after five years. Remember, a car’s value starts to drop as soon as you drive away from the dealer. And with that said, what can buyers do to protect themselves from spending a lot on a vehicle that will one day lose its shine?
The answer, of course, is getting a lease.
What is a car lease?
In simple terms, a car lease is when a person rents a vehicle for a fixed amount of time for an agreed upon amount between the car owner and the buyer.
Some owners who lease vehicles only stay in a place for a fixed number of years. Doing this allows them to return the car after the contract ends and they can move on to another city where they can then lease a new car.
But leasing is more commonly taken on by businesses because it lets them keep their machines new and they are guaranteed the quality of each leased vehicle.
There are many reasons as to why people choose to lease a car rather than take on a car loan. The number one reason is that lease payments are more affordable compared to getting a car loan. That reason alone is enough for most people to consider getting a lease.
But buyers also need to be careful, because breaking the lease on your car can mean that you will be responsible for paying any fees that it could incur. And that could be costly.
Why should I lease a car?
There are plenty of reasons as to why you should lease a car as opposed to buying one off the showroom floor. Here are a few reasons to rent a car:
It is easier. Compared to buying a brand-new car and committing yourself to a five or more-payment plan, rental is a more economical option. It is a lot easier on your wallet and a lot more comfortable in your mind, as you don’t have to worry about the depreciating value of the unit over time.
Ideal for business. If you lease a car for your business, it can become a tax deduction. Your hired car can get a higher tax deduction compared to buying and owning a vehicle for your business which holds the same purpose.
Better for your wallet. When buying a car, you are expected to make a down payment that can be considered pricey. The same can be said about the monthly payments you prepare for the next year or two. With a car lease, you can get the car at a price you can be more comfortable with on the long run.
Don’t worry about Car Value. Drive and get to your destination in style and with no worry for the next few years without worrying about your car’s declining value. A lot of people who buy their vehicles often worry about the difficulties they face when it is time to sell off their car for a new one.
You are protected against future loss. Another advantage of leasing over buying a car is that you are protected against any loss that can happen over time. This includes the unit’s wear and tear, eroding market conditions, and even a failed economy. Come what may, because if your car is leased, you’re sheltered from the storm and will never have to worry about how you will sell your car in the future.
Rent to own. Some lease agreements allow the buyer to rent to own a car after the contract has ended. This allows the person if he wants to, allowing him to own a car sooner compared to when he gets a car loan.
There are a lot of other reasons to lease your car. But of course, it also has its downsides. If you buy a car from a car loan, you’re free to do what you want and even go for long out of town drives with your mates.
You can’t do that with a leased car because the lease agreement will state that you can’t exceed a certain number of miles with the vehicle while it is in your care. This usually limits the buyer to only using the car for everyday use like driving it to work or school and nothing more for the next few years. So, consider what you plan to do with the vehicle before you decide to lease or buy.