Leasing A Car Has Many Benefits – Learn About Them All Here!
July 2, 2017Leasing is a way to drive a vehicle without actually owning it. Leasing is a great alternative to purchasing. Why? Because it helps you to avoid many of the negative aspects of buying a vehicle, whether you would finance it over time or pay in full up front with a cash payment.
Leasing Is Similar To Renting
Leasing a vehicle is generally similar to renting one, except that a lease usually lasts for a much longer term than a typical vacation or business car rental. What they both have in common is that you are paying for the use of the vehicle, and not for the vehicle itself.
By separating these two parts of the vehicle ownership equation, you are only responsible for the part of the vehicle that you use, which also includes depreciation over the term of the lease. The leasing company owns the vehicle for the entire duration of the lease, just as the rental company owns your rental car.
How Is A Lease Payment Calculated?
Your lease payment will be based on what your leased vehicle will be worth at the end of the lease. The factors that go into this calculation are the cost of the vehicle, how many miles you plan to drive it, the money factor (which is somewhat like an interest rate), and its typical residual value at that point.
Put it all together, back out the residual, and divide by the number of months – there is your monthly lease payment! It will be significantly lower than the monthly payment for financing the entire value of the vehicle over the same term.
The Benefits Of Leasing Are Many
There are many benefits to leasing. Some of these are economic, while others are more personal. Let’s review why leasing makes sense in today’s automotive world:
Benefit #1 – Leasing A Car Lowers Your Monthly Payment
Because you are only paying for the portion of the vehicle that you use, and not the entire thing, the monthly payment is much lower. By lowering your monthly cost of transportation, you have more left over for saving, investing, or entertainment. It’s your call on what to do with the extra money, but you will have it!
For more details on the advantages of lower monthly payments, check out this article.
Benefit #2 – You Will Always Have A Car That’s Under Warranty
Every vehicle in today’s market has at least a three-year warranty, so the typical three-year lease term keeps your car under warranty from beginning to end. This means no expensive surprises if there are any mechanical failures during your lease. It’s covered!
For more information on why it’s so great to always have a warranty, take a look at this article.
Benefit #3 – You Can Lease A Nicer Car Than You Might Be Able To Purchase
This is the flip side of the “lower monthly payment” argument. You may be able to lease something more upscale, higher performing, or with more options than you could purchase. If you are considering going this route, do yourself a favor and check out the related additional costs that may come with more expensive vehicles, such as higher insurance premiums.
For more on this great leasing benefit, check out this article.
Benefit #4 – You Can Tailor The Lease To Your Exact Usage Patterns
You may have known people who leased a car with insufficient miles for their needs, then found themselves way over on the miles and owed the leasing company a ton of money at lease end. This is a rookie mistake.
The beauty of a lease is that you can set it up with the exact number of miles you need. It will cost you a bit more per month, but take comfort in the fact that these additional miles cost less when you build them in up front, compared to what you will have to pay at turn-in time when you exceed your limit.
For more on beating the too-low mileage scam, take a look here.
Benefit #5 – You Won’t Find Yourself “Underwater” With A Long-Term Car Loan
Cars, trucks, and SUVs get more expensive each year. More safety equipment, more driver assistance features, and more technology are responsible. As a result, buyers are going for longer loan terms to make things more affordable, as long as 84 months. That’s seven years of payments on the same car!
The problem comes when you want to trade your car in after a few years – it is worth much less than what you owe on it! This is known as negative equity, or being “underwater.” It is a deep, dark hole of extra debt that costs you even more to get out of. It is something to avoid at all costs.
When you lease, there is no negative equity. At the end of the lease term, you simply turn in the vehicle, walk away, and start fresh – with a brand new lease on a brand new car that has a brand new warranty! That’s much better than having four years of payments left on a car that’s out of warranty!
For more avoiding this deep, dark hole of debt, check out this article.
Benefit #6 – You Can Put Little Or Nothing Down To Get Into A Lease
Many lease deals offer you the option of putting down a small down payment, or even none at all. This is the way to go. There is really no benefit to putting money down on a leased car if you don’t have to. Your lease will have a fixed cost, so why not hold onto your cash as long as possible?
For the whole story on this money-saving leasing tactic, take a look at these tips.
Benefit #7 – You Get All The Newest Fuel Efficiency, Driver Assistance, And Connectivity Technology In Your Car
The state of the art is advancing rapidly in the automotive world. More and more technology is being built into every area of new vehicles on an annual basis. This new technology provides you with improved fuel efficiency, advanced driver safety systems that watch the road and alert you to hazards, and the latest infotainment offerings that keep you connected while you’re on the go.
When you lease, you can have all the latest and greatest tech features that are available at that time. And when your lease is over and you start a new one, the next generation of technology will be there for you. It’s a win-win!
Benefit #8 – You Win When The Manufacturers Want More Sales
The car manufacturers have learned that the quick and easy way to increased sales is through better lease deals. To get a competitive advantage, they can boost the residual values of the models they need to move, resulting in some very hot lease deals.
The carmakers would rather lease the cars for less now and take a risk on what the car will be worth in three years. This is a much better strategy for them than using huge cash rebates at the point of purchase combined with financing, which tends to depress the resale values of these vehicles for years to come.
Benefit #9 – You Can Deduct More If You Use A Leased Car For Business
The tax laws tend to favor a leased car used for business over a purchased car, allowing you more generous deductions. Additionally, in most states, you only pay sales tax on the lease payments, and not on the entire cost of the car, as is the case when you purchase. Consult your tax advisor or check the relevant IRS publications for all the details that apply in your specific situation.
Benefit #10 – You Can Get A New Vehicle That Suits Your Current Needs Every Few Years
People’s lifestyles change, and leasing gives you the flexibility to change up your vehicle as your needs change. You may start out as a single with a sports car or a coupe. Perhaps you get married and need something larger, like a sedan. There may even be children down the road, requiring an SUV that can hold car seats and all the stuff you have to take with you as they grow up. Leasing lets you pick the right vehicle for your situation.
Benefit #11 –Use Hulq To Get A Better Lease For Less, Without The Hassle Of Spending Endless Hours At Dealerships
Welcome to Hulq, where you can save big on your next lease. It only takes minutes! Simply choose your ride, submit your offer and let dealers compete. Hulq puts the power in your hands. Our live price calculator gives you up-to-the-moment pricing information on your desired vehicle.
Hulq gives you the power and tools to make an informed offer in just minutes. Evaluate transparently priced, no-hidden-fee offers from our certified dealers and pick the leasing terms that are right for you. Accept online or visit your chosen dealer to finalize the lease. It’s that easy!
Leasing Is A Great Solution For All Your Transportation Needs
Whether you want to pay less, avoid repair costs, drive something nicer, protect yourself financially, conserve your cash, have the latest technology, or come out better at tax time, leasing a car is the answer to many different automotive questions.
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