Buying a car is a significant purchase, so it's a good idea to determine if car leasing is a viable option. Many people prefer this alternative because they get a new car every few years without having to trade in or sell their old one. Here are some things you should know if you are thinking about leasing your next car.
Lower Monthly Payment
In many cases, the monthly payments for a lease are lower than for a new purchase. This is because the initial payments of the lease go towards the depreciation of the car. Therefore, if you were to lease a vehicle for three years, you would be paying for less than its full value.
Smaller Down Payment
Most car leasing agreements have a lower down payment and fees than owner financing. In some cases, you may pay lower sales tax, since it is based on the amount of the monthly payment rather than the value of the vehicle. This should save you money on upfront costs.
Mileage Requirements
If you spend a lot of time driving, things could get expensive. Most lease agreements have a mileage limit of 10,000 to 15,000 miles. If you exceed this number, you could be required to pay an additional amount per mile. In some cases, you can negotiate the fee or mileage limit before you sign the agreement.
Wear and Tear
You may need to take extra care of your leased vehicle. If the car gets scratched or the kids stain the interior, you could be subject to wear and tear fees. In some cases, this could amount to three months' worth of lease payments.
In the long run, buying a car is a more economical option. However, if you are not planning on keeping your vehicle for a long period of time, car leasing might be the better choice for you. In any case, be sure to calculate all of your costs before you make your decision.
