A 2016 survey found that more Americans than ever before are leasing cars. At first glance, this might seem foolish. We’re so trained to believe that purchasing a house is better than renting—why wouldn’t the same be true for a car? Doesn’t it make sense to invest in property that is really and truly your own?
While there are certainly arguments to be made in favor of buying a car outright, there are just as many reasons to consider leasing a car instead. Here are six of them.
You don’t have to make a long-term commitment.
Most leases last for just a few years, so you can pick out a new car whenever your lease is up. This means you won’t be stuck with a car you hate. It’s also a great option for anyone who’s averse to long-term commitments or who likes to experience driving a variety of vehicles.
You don’t have to pay for major repairs.
Once you’ve purchased a car, you are wholly responsible for all maintenance and repairs (with the obvious exception of recalls). Nobody is going to help you out with the bill; unless you pony up the cash, you’ll be stuck without a functional vehicle. In contrast, when you lease a car, all major mechanical malfunctions are covered for you (so long as they fall under the manufacturer’s warranty). Because most leases only last for a few years and most leased vehicles are fairly new, odds are good the vehicle will still be covered under warranty for the duration of your lease. Even if that’s not the case, leased vehicles are usually eligible for extended warranties—so it’s easy to ensure you won’t be footing the bill for any major malfunctions.
Your monthly payments will likely be lower.
When you lease a vehicle, you don’t have to finance the entire cost of the car. Instead, you only pay for the depreciation that occurs during the term of your lease as well as some additional fees. This means that in most cases, monthly lease payments tend to be lower than monthly payments on a loan. As an added bonus, most leases require a smaller down payment than if you were purchasing the vehicle outright.
You can bypass dealerships.
There are few things worse than heading to a car dealership, where notoriously sleazy salesman will present you with all sorts of confusing information that may or may not be in your best interests. Few people realize this, but leasing allows you to bypass dealerships entirely by working with third-party brokers instead. Brokers are typically industry experts who are trained to assist you in the leasing process with greater transparency and efficiency than you’ll find at most dealerships.
You may be able to deduct some of your investment.
If you utilize a leased vehicle for business, you may be able to enjoy a number of tax write-offs, including a portion of both the depreciation and financing costs that are included in each of your monthly payments. (Just note that leased luxury automobiles might qualify for fewer deductions.) These deductions may not be available to people who purchase a vehicle with a loan.
You don’t have to deal with the hassles of resale.
When you’re done with a leased vehicle, you can simply return it to the dealer and go on with your life. There’s no need to worry about finding a buyer, fielding creepy Craigslist inquiries, or haggling with strangers. You also don’t have to take a financial hit in the form of an owned vehicle’s inherent value deprecation.
Of course, there are a few caveats here: If you drive a lot or anticipate subjecting a vehicle to a ton of wear and tear, then you might be better off purchasing a car outright. That’s because many leases include extra mileage fees and wear and tear fees, the latter of which can add up to the equivalent of as many as three monthly payments. But for those people who may be hesitant about committing to a car for the long term or who want to save on their upfront and monthly costs, leasing a car can be a stellar option.
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General Election: Nov 3, 2020
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