We are obviously a little biased here at Prime Motors towards car leasing.
However, we thought a good in-depth look at the advantages and disadvantages of car leasing and car buying might help to clear the issue. If you are still deciding, maybe we can help you with some insight from the industry.
This information is true of the leasing industry in general but not specific to all deals. So please, if anything is unclear talk to one of our reps today. Our deals are so much better than the ‘standard’ leasing deal.
Advantages of car leasing
Your payments will normally be lower month by month than if you bought a car with a loan. That is unless you stretch the loan out over many years. However, that would mean paying so much more in the long (real) term, because of interest payments.
Car leasing comes with great warranties and guarantees often including oil changes and maintenance. So, of course, the typical maintenance bill will be lower than a bought vehicle.
Once the lease runs out, the leaser will take the car back, so no need to worry about finding a buyer or getting a lousy trade in which is so often the case with a bought car. Finding a buyer can take an awful lot of time and effort. Unless, of course, you choose to take a lowball figure.
Most of us buy used cars not new, so you should worry about the history of the car. This is not a problem that springs to mind with leasing.
Getting approved for a car lease
Most times there will be no deposit which can really help those who love the idea of a luxury car or a car out of their normal bracket but find it difficult to come up with a down payment.
Bad credit history can really kill your dreams of owning a luxury car, but often with leasing, approval rates are so much higher.
Depreciation is the amount a car goes down in value once you have owned it for any period of time.
This is a real deal wrecker when it comes to buying a car, especially a newer model. Once the manufacturer’s guarantee runs out the car depreciates quickly.
Tax refundable cost
If you are the owner of a business or manage the finances, then leasing wins every time as this is tax deductible, whereas a bought car is not.
For some businesses that can be a large amount.
Since the monthly payments are so much less for car leasing, you can go for a better class of car. Impress your friends and clients.
Disadvantages of leasing
Obviously, the monthly payments are a fixed cost and since you cannot ‘sell’ the car …. Should you go out of work, this would severely hurt your cash flow. On the flipside, that is also true of loan payments, so car ownership will not always help. You could sell the car but then … how do you get to job interviews?
The additional fee when you go above your yearly mileage can sometimes feel harsh. So from the get-go, make sure to negotiate as many miles as you need. If all you do is the drive to work and back, then do not worry, but if you want to use it for family outings? Get a higher mileage upfront.
Depreciation in car leasing?
Once your car is a little older, you will still be paying the same monthly as you did when it was new. That is a kind of depreciation for a lessee.
There are no fixed rules on this in the industry in general, so always ask, negotiate and get a great deal. Some lessors ask for a down payment.
You must keep that car clean and shiny like new. That is how the car must be returned. Charges will be made to fix any issues. Always ask when negotiating a lease.
You will have restrictions on customization. The car is not ‘yours’ so you cannot do as you please with it.
Insurance can seem a little more complicated, but it does not need to be if you speak to a professional service such as Prime Motors.