When you are out to buy a family car, you will naturally be spending a lot of time over the selection of the model so that it best suits the requirements of your family. Another prime concern is to make the selection within your budget and not go overboard with the features that car salesmen dangle ever so tantalizingly before you. One of the very good ways of keeping within manageable limits is to lease the car instead of buying it outright with cash or with a bank loan. However, most people do not really understand what the benefits of leasing cars are and how to make leasing work for them. Some reasons why leasing could be a smart decision:
A New Car Every Three Years
Leasing vehicles give you the option of driving a new car every three years. This is because typically cars are given out on leases for that period. Once the lease expires, you can simply return the car to the dealer, and drive away in a new car after executing another lease. Driving cars that are new have many advantages. The cars will give you trouble-free service and you don’t have to worry about costly maintenance too as the cars have manufacturer warranties over the lease period. Switching cars every three years also enables you to keep improving your lifestyle with new and technologically-advanced vehicles that can carry your family with greater comfort, safety and economy.
Having the option to change the model every few years also means that you can select the car according to the changing needs of the family. When you are newly married you may like to drive a sporty car and then change to a sedan when you have kids, and then again a multi-utility vehicle as your family grows. Whatever be the reason, leasing gives you an unbeatable advantage over a typical 60-month bank loan.
Clocking Up Mileage Less Than 15,000 per Year
Leasing a car works out just great if your annual mileage is less than 15,000 per year as most of the leases are structured to allow that. If you drive more, you would end up paying large penalties when you return the vehicle at the end of the lease. You should keep in mind the mileage you expect to clock up every year and have the lease structured accordingly, however, generally leases will not allow very high mileages as the residual value of the car drops sharply. You may wish to buy upfront extra miles at the time of signing the lease agreement. While not cheap, it will work out to be far more economical than paying the penalties at the end of the lease term.
You Are Financially Stable and Have Good Credit
It is not easy to get out of lease agreement so you should only enter into one if you are certain that you can easily afford the monthly lease rentals. If for any reason you decide that you no longer want the car, terminating the lease can be very expensive. If there’s the slightest doubt in your mind regarding your capability of paying the lease rentals, avoid lease finance. If job stability is an issue, it is all the more necessary for you to avoid lease finance even though you may be tempted by the lower monthly payment. There’s always an option of trying to find someone to take over your lease. While in the past this was quite difficult, the emergence of online specialist websites that do just this can prove to be very useful indeed in getting you out of a potentially sticky situation.
No Money to Pay the Down Payment
Generally, you do not have to make a down payment and even if you are required to make one, the amount will be far less than on a typical loan. Since the monthly lease rentals are also far less you can consider cars that are more expensive. Lease purchases work out great for those who have stable jobs and want reliable vehicles that could be outside their budget for the time being. However, it is also necessary to keep in mind that at the end of the lease you need to return the car and there will be no physical asset that you own.
Author bio: Jake Smith is the head of car finance at a leading car dealership. He writes regularly for a number of car and finance websites like http://leasequit.com/.
I have never thought about leasing a car because when I was working I drove too much to make it a practical alternative. Now , however, I should give it some thought
I have never leased a car but I can certainly see how it could be a good option in certain situations especially if one anticipates changing needs in terms of family size or moving. Like some of the other folks, we tend to keep our cars for a long time so buying outright makes more sense.
I kept my previous car for 20 years and I’ve had my present car for 10 years. No family so I never even considered leasing.
This is good information. I would like to consider a lease next time, although what I typically do is keep a car so long that buying makes more sense
I have never leased a car. I have always figured that I would rather get a used one. I also have never had a new car so maybe thatts a factor. Good tips though for folks who want a new car!
I have leased a car before and I later ended up buying it. I had a great experience with leasing but that was a long time ago. I enjoyed reading your post. Thanks for all of the great information I will keep this in mind the next time I am in the market for a new vehicle.