Before getting a car, remember to weigh all of your options carefully. Are you ready to take out a car loan and the financial responsibility that comes with it? If not, then it’s best to step back from the plate and consider another option: a car lease.
When you lease a car, you get all the benefits that come with it. That includes a low or almost non-existent down payment, an affordable monthly fee and of course, the most appealing aspect: the promise of a new car upon renewal of a lease.
When should you lease?
A car lease is more appealing with everything a fraction of what a loan would typically cost. But there are certain situations wherein a contract may become a burden rather than an advantage. For example, if you want a van so you can take your family on long road trips for a vacation once or twice a year, you might be better off with a car loan instead.
In most cases with leases, you are limited to a certain number of miles per year depending on what you agreed to on the contract. A breach of contract is frowned upon, and it is best to stick to your agreement with the dealer to avoid paying unnecessary fees.
But if you’ll only be living in a city for two or three years and then leaving it permanently after, a lease is a more economical choice. You won’t have to worry about paying the car loan, and you can get rid of your car as soon as the lease is up.
Aside from this, there are other situations wherein getting a lease is more logical than a car loan. Here are a few examples:
Money to Spend. One thing you should know about car leases is that you are prone to additional fees if you’re not careful. That includes per-mile charges if you accidentally go over the agreed upon 10,000 to 12,000 for every year you have the vehicle. You can also be held liable for repairs that aren’t under warranty. In short, a lease may mean less money out up front but could mean more money will be spent towards the end of the contract, depending on how careful you are with the vehicle.
First Generation Vehicles. With the advancement of technology and the many features they boast, car manufacturers are quick to pounce and incorporate them into their vehicles. An excellent example of this is the 2010 Chevy Volt. A big issue with the unit according to car reviews is that its battery power doesn’t get the mileage people want and that it was designed for only four people. All of these issues were addressed in the Chevy Volt 2016. If you want to try a first gen car, it’s best to get a lease on it because first gen cars are almost always plagued with problems.
Avoiding Down payment. When purchasing a car, you are expected to make a down payment. Down payments are pricey, and for those rushing to get a car, it’s a pain in the neck. Leases usually require a more affordable down payment, and in some cases, don’t require them at all. That is a burden lifted off the shoulders of people who desperately need a car but can’t afford to put a damper on their savings.
Business purposes. Some businesses that offer retail or delivery services require a vehicle. Buying a car brand new and having to commit to its payment for a few years may be harrowing considering that each time they use the car, it depreciates. And the more you use it, the worse its wear and tear. Leasing becomes the best option here, as the business owners pay a lower fee for their fleet of vehicles, and are guaranteed to get a newer model every time their lease is up. As a bonus, companies who lease their cars are eligible for some generous tax deductions that can help them out in the long run.
Is your reason part of this list or is somewhat related to what we talked about? If it is, then maybe leasing is for you. And if not, perhaps you are better off getting a bad credit car loan to acquire a new vehicle for use.