Do you have a tendency to trust every ad that you see on television, or are you the consummate skeptic? Do those commercials about leasing a car or truck seem mighty attractive because of the advertised lower monthly payments? If so, maybe it is time to look at the facts about leasing in order to determine if this is the best financial option for obtaining a vehicle.
Rewarding Aspects of Leasing
While not recommended by most financial advisors, leasing does provide a few benefits to those in need of a new vehicle. Leasing may be right for you if several of the following are important considerations:
• Leasing allows the driver to sport the most recent models.
• Leasing prevents the driver from having to worry about maintenance.
• Leasing generally results in lower monthly payments.
• Leasing prevents the driver from having to worry about reselling or trading in a used vehicle.
• Drivers who lease only pay taxes on each month’s use of the vehicle.
• Upfront costs of leasing are almost always lower than buying outright.
• Lease payments can often be deducted on income taxes.
Most people think that people who lease a car have no bargaining power about the price, but there are actually some steps that can be taken to get a better bargain from a lease. You get a much better bargain if your past credit history is excellent. You may also get the dealer to consider lowering the sticker price. This is easier if you research the make and model prices that people in the area are paying for these cars when they buy them.
Negative Aspects of Leasing
People who work with finances on a daily basis point out that leasing is rarely the best way to obtain your next mode of transportation. They give the following observations to back up their opinions:
• Even though drivers are making payments each month, they are accumulating no equity in their car or truck.
• Leasing contracts are so binding that stiff penalties may be incurred if the driver’s circumstances change, and the terms of the contract cannot be fulfilled.
• Leasing down payments and monthly payments are based on the driver’s credit rating and may be much more than advertised or expected.
• Leasing agreements generally include a clause that requires the driver to pay for damages done to the vehicle beyond normal wear, but the dealer is the person who gets to assess these scratches and dings at the end of the contract.
• Leasing always limits the number of miles that may be driven without paying additional fees.
• Leased vehicles must always be serviced by the local dealer.
Some people are quite happy with the way a lease works, but others have been completely disappointed and have felt that they wasted money on their contract. Reading the fine print in a lease agreement and weighing the rewarding aspects of leasing against the negative should help you make the right decision when you get ready to replace your current vehicle.