Most of us know about owning a car so I will focus more on leasing.
Lower Up-Front Cost - You are only buying the portion of car life (depreciation) and therefore your down payment and monthly payments are typically less compared to buying a car.
Better, Newer Car - This is perhaps the most common reason for choosing to lease over buying. Since you are paying less per month, you can afford to go with a better model. Most leases are on NEW vehicles anyway.
Disposition After Lease - Simply drop off the vehicle at the dealer and leave the keys. No need to worry about trading in or disposing of the car.
Up To Date, More Secured Vehicle - Newer cars are equipped with better security features and more newer advanced features. Since you're getting a newer lease every couple of years, you're getting a new car with latest gadgets. Most car owners cannot afford trade in their vehicles every two to three years.
Extra Insurance - Dealers may ask you to buy additional insurance to cover the vehicle.
Tax Cuts - This is a really great tax-saving strategy for business owners. Come to our office or speak with your accountant to see how you can take advantage of leasing a vehicle. Depending upon the vehicle, state, and the city, you may be eligible for special tax breaks.
Sound like I am suggesting that you should lease your next car.
Not so fast. Each individual should carefully look at its finances, tax brackets, and other factors before choosing this option.
For example, you may decide to own a car due to:
Mileage Limits on leased vehicles - I leased my last car. I got to 10,000 miles per year for two years. I ended up with 35,000 miles.
15K Mile overage x 20 Cents A Mile = $3000 bill (a bill I was not expecting)
Wear and Tear - What do you think dealers do when they see the car is not in original condition? Got Kids - I would think twice before leasing. Talk to your local dealer to see what is acceptable vs not acceptable normal wear and tear. Try to get it in writing.
Lost $$$$ - Sorry but you are NOT getting anything back once your return the vehicle. If you owned the vehicle, you can always sell or trade in.
Ok, How should you decide?
consider the following -
- how often do you drive and how long (number of miles/yr)
- your budget (downpayment and yearly budget for the vehicle)
- how good are you in keeping your car in superb condition.
- your credit score
- how long do you plan to keep your vehicle?
I hope this helps. We strongly recommend a consulting appointment for business owners to plan out a proper strategy before buying or leasing a vehicle.