Benefits of Leasing a Car

Many drivers find leasing a new vehicle to be a better option than buying with cash or taking out a car loan. Their reasons for this vary, with some preferring the financial benefits and others the short-term commitment.

Still, confusion persists among shoppers regarding the pros and cons of leasing a vehicle. We encourage asking the opinions of friends and family, but in the end, the decision to lease a vehicle comes down to several key factors, including your needs, credit history, budget, and lifestyle.

We asked our lease experts to examine the subject and dispel some common misconceptions surrounding leasing a vehicle. After reading what they have to share, you’ll have the necessary facts to make an informed decision.

Advantages of Leasing a Vehicle

Image by Greg Gjerdingen | Licensed with CC BY 2.0

No matter what vehicle you choose, you can enjoy certain benefits that a lease offers. Here are several perks of leasing a vehicle:

No Long-Term Commitment

To begin with, you aren’t locked into a long-term commitment. Most lease deals last 2-3 years. At the end of the lease term, you can turn the vehicle in and lease another one. It’s that easy. If you stick with this approach, you’ll always drive a brand-new car. This practice has several benefits: you’ll always get to be the first person to drive the vehicle, and you’ll be the one to break it in and enjoy that new car smell.

Enjoy the Newest Features

In the ever-evolving automotive industry, new features get introduced each year. Leasing a new car every two years ensures you’ll have the latest vehicle technology, driver-assist systems, and comfort features.

Lower Monthly Payments

Leases typically have lower monthly payments than regular car loans. Depending on your chosen vehicle, this could save you hundreds of dollars a month.

Less Financial Risk

When you purchase a car with a loan, you assume responsibility to repay the loan, regardless of the vehicle’s condition. Usually, this doesn’t impact your financial position. However, if you have an accident and the insurance company determines your car is a total loss, you could repay more than the insurance company will.

Unfortunately, a new car depreciates rapidly in the first few years, resulting in owing more on your car loan than the car’s actual value. For example, if you owe $20,000 on your loan and the car is worth $15,000, you are paying $5,000 more than the car is worth, and you could owe that $5,000 to the bank if your vehicle gets totaled.

When you lease a vehicle, the dealership still owns the car. As a result, the vehicle is insured through them, and they pass this cost along to you as part of your lease payment. However, they assume the risk, not you.

Lower Maintenance Costs

Your lease includes routine maintenance for your vehicle. The dealership will perform oil changes, tire rotations, and other factory-scheduled services at no charge.

Warranty Protection

Leasing a new car provides the same warranty protection that new car owners enjoy. For example, a new Ram 1500 comes with a limited warranty that lasts for three years or 36,000 miles, whichever comes first. This warranty covers everything from bumper to bumper. You get this protection whether you buy or lease. Other warranties include a powertrain warranty for five years or 60,000 miles.

Option To Buy Your Leased Vehicle

At the end of the lease, you have a few options. You can turn the vehicle in and lease another one. Or, if you fall in love with your vehicle, you can buy it. The dealer calculates the purchase price at the time the lease begins.

This could be advantageous if you select a vehicle that holds its value well. Today’s used car market has seen prices climb much higher than anticipated. As a result, if you leased a vehicle 2-3 years ago, your car has a much higher value than projected in the lease. So, you can purchase the leased vehicle and keep driving it or sell it and make a profit.

Lease Turn-In Deals

Many dealerships offer better terms on a new lease when your old lease expires. This is because your leased vehicle provides them more value than a regular trade-in, often qualifying as a certified pre-owned car. This puts you in an advantageous position, resulting in the dealership giving you better terms on your new lease. You could see offers ranging from zero down to lower monthly payments to more free miles. We recommend you always contact your lease dealer at least six months before your lease ends to explore your options.

Important Leasing Considerations

Leasing makes sense for many people. However, it’s important to be sure you consider all elements of the lease agreement before committing. It’s a good idea to project your mileage as accurately as possible. Your lease will allow a pre-determined number of miles you can drive, typically around 12,000 miles per year. If you exceed the allotted miles, you get charged a penalty for every mile over. This penalty can range from $0.10-$0.30 per mile, resulting in a significant balance at the end of your lease.

Lease deals vary by manufacturer and vehicle. Many leases require a down payment, but not all. In addition, you can negotiate any down payment or offset it with a trade-in. You also can’t modify a leased vehicle. If you’re the type of driver who always wants to put a new set of wheels on your Jeep Gladiator or add a spoiler to your Dodge Charger, you’re better off purchasing a vehicle.

You never build any equity when you lease. Essentially, you’re renting the car for 2-3 years. Even though you save money monthly, you continue to have a monthly payment for as long as you lease. You can break the cycle and purchase your leased vehicle if you choose. Many drivers like this leasing aspect, as it allows them to try out the car for a couple of years before committing.

Explore Lease Deals in Louisville, KY, Today

As we initially said, your lifestyle, needs, and budget determine if leasing suits you best. We believe leasing offers significant savings as well as advantages over buying. However, we encourage you to explore these elements yourself. You can start by searching our virtual inventory for a vehicle and then visiting our finance department to discuss your lease options with a specialist.