These days, many people are leasing vehicles rather than buying them. For a lot of people, this is a much easier and less expensive option. While leasing does have some drawbacks, there are numerous advantages. Let’s take a look at the great reasons to lease and some things to consider before leasing a vehicle.
Advantages and Disadvantages
According to an expert from eAutoLease, “The benefits of leasing are numerous; a new car every two to three years, low monthly payments, full warranty, etc.” There are actually many benefits to leasing a vehicle rather than buying one. Let’s take a look at those benefits, as well as some of the disadvantages of leasing.
- Liability – When you lease a vehicle, you are only paying for part of that vehicle. Therefore, you have less liability in the event of an accident. However, you will likely be required to have gap coverage. This is a higher rate of insurance which many auto buyers choose as well. With this coverage, you will have a full payoff if the vehicle is destroyed or stolen, which is going to give you better peace of mind. Just remember, it is more costly to have this coverage, so it is something to seriously consider before leasing, as it is not always as advantageous as it may sound.
- Taxes and Business Write-Offs – Because you aren’t paying the full purchase price of the vehicle, the taxes are going to be lower than if you were to buy a vehicle. You will only have to pay taxes on the payments you make. You can also use your vehicle for business and claim it as a business write-off on your taxes. For business owners, this is actually a lot easier than writing off a vehicle that has been purchased outright.
- Maintenance – One of the greatest advantages of leasing a vehicle is the fact that you don’t have nearly as much vehicle maintenance to worry about. But, this doesn’t mean that you are off the hook if you need to have certain repairs done. You need to find out exactly what is covered in the maintenance plan and what you will have to be responsible for yourself. Remember, if you are in an accident, you are going to be liable for any repairs that need to be made, and you may be required to have repairs at a dealership, which is very expensive. Roadside assistance will be included, so you at least won’t have to pay for boosts, towing, etc.
- Credit Approval – Getting credit approval to lease a vehicle is generally a lot easier than getting credit approval to buy a new vehicle outright. This is because you don’t have to ask for as much money, and lenders are more likely to provide credit even if you have poor or no credit to begin with.
Things to Consider
Before leasing a vehicle, there are several things that you need to consider. While there are many advantages to leasing, there can be some disadvantages as well.
- Look at Your Income – Even though leasing payments are much lower than financing payments, you still need to make sure that your monthly cash flow will allow you to comfortably make those payments.
- How Much You Drive – If you do a lot of driving, you can expect to have to pay more for mileage on your leased vehicle. Many leasing companies will charge up to 20 cents for each additional mile that is not in the original lease agreement.
- How You Treat Vehicles – Some people are harder on vehicles than others. If you find that your cars are always getting scratches and dings, it may not be best for you to lease. There will be wear and tear fees, and the more you damage the vehicle, the more you are going to have to pay.