Why I Lease

Conservative folks will tell you buying is the way to go. You get “no mileage restrictions”, equity and the pride of actually owning something. Truth is, I can’t argue with that because they are facts about auto purchasing. So what do you get when you lease? You get the car for a fixed period of time, you’re limited on your mileage and at the end of the day, you get a car for the duration of the loan, so (typically) you won’t have any equity at the end of your lease. With that said, it almost seems ironic why I would recommend leasing. Facts may be facts, but leasing is not as cut and dry as buying, which is why people who don’t understand leasing or don’t care to understand it, bash it.

Why I like leasing:

• Lower out of pocket “drive-offs”: Leasing generally requires you to put little money down. Just your 1st month’s payment, taxes, license and fees.
• Lower monthly payments: Since you aren’t paying for the whole car (just the depreciation, interest and tax typically), your payments are less than buying.
• Car is almost always under warranty: 24-48 month terms will typically keep your car under warranty during your lease period.
• New car every 24-48 months: You can enjoy the excitement, upgraded technology and safety of a new car every few years.
• Option to purchase your car at lease-end: You can sometimes renegotiate the sale price of the car again, saving you more money.
• Previous Owner: You know who the previous driver was, YOU
• You can make some money at lease-end: If you take good care of your car and keep the miles well below your yearly allowance, you can sometimes get money back on a trade-in.

Things to consider:

• You can’t lease any car: Getting a good deal generally depends on three things; depreciation, interest (money factor) and any rebates/incentives the dealer or manufacturer will give you. Some cars depreciate much slower than others. (i.e. BMW 3-series vs Ford Fusion).
• Mods: You can make modifications to your car, but you must restore the vehicle to original factory specs if you return it
• Turn-in fees: Some contracts have them, some don’t. Just make sure you know what you’re getting into.
• No equity: A car is generally a depreciating asset. You can’t avoid it even if you buy it. In some rare cases, you actually can get some equity out of your lease if you use it as a trade-in.
• Insurance higher: Leases have a minimum coverage requirement, which is higher than most people insure their cars for. However, if you own a home, it shouldn’t make much of a difference since you should be covered by more than just the “bare minimum”. Typically, insurance rates drop as your car gets older. Since you drive a new one every few years on a lease, you will pay more over the long run; same goes for car registration.
• Limited miles: This isn’t THAT big of deal unless you don’t know how many miles you typically drive. Please note that if you commute far and put more than 15,000 miles are year, leasing is NOT for you. The main reason dealers limit your miles is because the more miles put on it, the less equity the car has.
• Which is cheaper? Buying or Leasing? In my experience, buying becomes cheaper than leasing AFTER you keep the car for 6+ years. IF you sell it before that, it is about the same

Obviously, leasing is not for everyone. It is a reoccurring cost, so if you like not having payments in the long run, you either buy from the car from beginning or buy your lease at the end of it’s term. Whether you lease or buy, driving a car is always going to have reoccurring costs. Buying just gives you breaks in between the payments (once your loan is paid off).

A little bit of history as to why I lease. The last car I OWNED was for about seven years. It started giving me some problems toward the 6th-7th year (It needed a new transmission, warranty didn’t cover it, rust, engine leak, etc…). Knowing the value of the car (around $3000-$3500) I wasn’t about to spend $2000-$2500 fixing it. Instead, I opted to trade it in to the dealer for $2500. I got about 1.5 to 2 years of a break of payments, which is not exactly a long break considering I had to put down $7000 to get my payments around $250/mo. Ever since, I started leasing and I have not looked back.