A Car Lease – Everything You Need to Know
How is a Car Lease Different Than Auto Financing?
Rather than buying your car and paying monthly, a car lease allows you to essentially rent the car on a contract and pay monthly. While they may sound similar, in one instance you own the car (financing) and in the other you are renting the car (leasing). When your lease contract is over (usually two or three years), you return the car to the dealership.
So why do people bother leasing? It allows them to essentially upgrade their vehicle every few years. They’ll never own their vehicles, but they also won’t be trapped in five- to seven-year finance contracts for diminishing assets.
Remember, leasing is not buying. Many people think that a car lease implies you are buying half of the car over two or three years. In reality, the half that you pay for is the loss in value that the vehicle experiences over that period.
At the end of your car lease, you do have the option to buy out your car. Meaning, you could actually become the owner of the vehicle. This option means that you pay the residual value to buy the vehicle.
Why Should You Get a Car Lease?
Sometimes it’s better to rent a house than buy a house. The same applies to vehicles.
A car lease isn’t for everybody. Whether it’s right for you depends on your financial situation and lifestyle. Buying a car, like buying a house, is an investment. It needs to make sense.
Leasing a vehicle makes sense if you:
- Want to drive a new car every two or three years
- Want lower monthly payments
- Need the latest safety features and a car always under warranty
- Don’t care about building ownership equity
It’s also important for you to have a stable, predictable lifestyle; drive a predictable number of kilometres every year; and have no problems properly maintaining your vehicles.
If this sounds like you, you would be an excellent candidate for getting a car lease.
Is a car lease worth it?
Depending on what you want out of a vehicle, a car lease can be well worth it in the short run.
However, leasing vehicles can become costlier than buying a car over time. But people who lease are typically more concerned with the short term gains. With a lease, your monthly payments are lower than they would be if you were financing.
Because a car lease only lasts a few years, you are free to get a new car once your contract is over. If you did this every time you financed a vehicle, your costs would be much, much higher. That’s why it makes sense to lease if you expect (or prefer) to have a lot of turnover with your vehicles.
What Are the Benefits of a Car Lease?
The benefits of a car lease are:
- Smaller monthly payments
- Lower up-front costs than financing
- New vehicles, more often
- Better technology and features, more often
As stated earlier, one of the great benefits of a car lease is that you can upgrade to the newest model every few years. This ability to upgrade doesn’t impact your payments. After all, who wouldn’t like a new car every two years?
Another thing that people like about car leasing is how you usually pay less in tax. This is because you only pay taxes on your monthly payments (a couple hundred bucks a month). Whereas when you finance or buy a vehicle, you are paying taxes on the full price of that vehicle (tens of thousands of dollars).
What Are the Disadvantages of a Car Lease?
The main disadvantage of leasing a vehicle is the fact that you do not own said vehicle.
You are also in a binding contract, and this can sometimes be restrictive and costly. If you aren’t careful with your leased vehicle, you can incur penalties. For example, to maintain the vehicle’s condition, you are only permitted a certain amount of kilometres driver per year (15,000-20,000 typically). If you go over that amount, you have to pay “overage” charges.
If you cancel your contract early, you are still responsible for paying the remainder of your lease agreement but in one lump sum. Ouch!
How to Get a Car Lease
Car leasing is easier than ever, especially at Go Auto. We make it so you can find the best car for your lifestyle and get the best deal for your budget. Follow these steps when you are looking to get a car lease.
- Before visiting a dealership, try to decide on the type of vehicle that best suits your needs. Is it a car? An SUV? A truck?
- Figure out the brands that interest you. Go Auto has almost 20 new-vehicle brands to choose from. From Ford to Dodge to Hyundai to Volkswagen to Porsche, we’re sure to have something for you.
- Narrow down the models you want to look at. Then book an appointment at a Go Auto dealership beforehand to speed up the process. This will also allow the dealership to tailor your experience with test drives, price comparisons, etc.
At Go Auto, we want you to be comfortable with your lease. That’s why we’ll start with test driving the vehicles you’re interested in. This lets you compare and contrast your chosen models.
Once you’re done, go home and sleep on it! After you’ve had a good night’s sleep, and you’re sure about your decision, come back to the dealership to finish up your deal.
Then, two years from now, when your lease is up, come and get yourself a brand new vehicle!