Interested in leasing a car instead of buying one? Not sure what exactly leasing a vehicle entails? Well, don’t worry we are here to break down the basics of what it means to lease a car and how it works.
Leasing a vehicle every few years is still an immensely popular option to purchasing a vehicle outright due to the low monthly payments and the fact there are no large costs. When you go to lease a vehicle instead of buying one you will notice one of the main differences is the fact that you don’t have to take a loan out, make a large deposit, or pay for the full value of the vehicle in cash right on the spot. Leasing allows you to pay for a smaller portion of the vehicle’s actual value which is then followed by monthly payments for the duration of the lease. According to the finance department at Hyundai of Lousiville (KY), most leases nowadays are usually 36 to 48 months.
While you are leasing you are given a maximum number of miles you are allowed to drive in a year. Normally that number is between 12,000 and 15,000 miles. Most drivers in America average more than 1,000 miles per month which equates to roughly 13,500 miles each year. If you work close to home or don’t try that often your yearly average can be far less.
Once you’ve reached the end of your lease agreement you will have to bring the car back to the dealership. Once the car is back at the dealership they will do a thorough inspection of the vehicle. During this inspection they will look for any damages and excessive wear and tear the vehicle might have suffered.
So is it better to lease or buy a car? That answer really depends on a variety of personal preferences and lifestyle factors. Here are a few things to consider while you are deciding between leasing and buying:
- How often you need to drive your car
- How long you’ll need the car
- Your preference for newer cars
- How much you want to spend
When it comes down to it, leasing basically just means you are renting the vehicle out from the dealership for a certain length of time and a certain amount of miles. This means you have no equity in the vehicle.
Leasing is a great option though if you want something out of your price range for purchasing, if you always wanted the latest vehicle, if you’d like to drive several different types of vehicles over the years, if you take good care of your vehicles, and if you won’t exceed the mileage allotted per year.
Another bonus to leasing a brand new vehicle is the fact that your lease will most likely be up by the time any major service is needed, like a new set of tires. This means you avoid the 50,000-mile maintenance along with other expenses required maintenance that comes with owning a vehicle.
If you decide to lease a car make sure your agreement includes gap insurance. Gap insurance covers the cost between what you owe on the vehicle and the total cost of the vehicle. So if you were to get into an accident and total the vehicle you would only be responsible for the amount you had already agreed to pay for the vehicle and not the full cost of the vehicle.