You are here reading this article because your old Jalopy is consistently dying on you, or maybe you are just somebody who is confused about the better alternative to owning a car? Whatever the reasons, I will be explaining to you about ways you can efficiently utilize your investments into automobiles. So, how much does it cost to lease a car? You ask. Before we unlock the quest to reach a rational conclusion, I will be shedding light on the buying versus leasing strategy. Should you buy or lease a car? Which option makes a better financial sense? The practicality can’t be achieved entirely because of the options available, but savings can be effortlessly managed through precise planning. It is the dilemma that you undergo when a car is on your agenda. So, the best way to know is to understand your needs, driving behavior and various other factors, but if cost saving is on your mind, here is what you must know. Do bear in mind, the leasing or owning, each has its share of pros and cons but on a common notion, leasing is a better approach to short term duration such as under five years, if you like to change your car often, if you are driving distances lesser than those being specified in the agreement, if you are less prone to cause damage to the vehicle, etc. But if you owned the car, then the value of the car increases every time you make payments on your financed automobile. Also, if you paid off the auto finance loans, then your car is subject to your right of handling. You can sell your car or use them as per your convenience.
Here Are More Precise Explanation On Leasing
Suppose for a car that costs $20,000 the owner pays an amount of $608 per month considering the negotiation for the finance is set 6% rate of interest for the auto loan for a term of three years before the vehicle can be owned, but a person who leases the vehicle needs to pay just $350 per month for period of three years and $385 for an extension of two more years upon request.
Also, the monthly payment will be lower when you lease the car because you pay only for the depreciation amount during the lease term rather than paying for the entire one-time expense of the car.
The sales tax is lesser when you lease your car. However, some states levy sales tax based on the monthly payment rather than a one-time purchase of the vehicle. Down payments are lower and affordable when you lease the car. Sometimes, your dealer will be able to waive the down payment. When you have to pay less or nil for the down payment, you can save the budget for another purpose.
The Distance You Drive Can Credit Your Savings
Did you know that some leasing company can charge you extra for every additional mile you pile? Yes, the amount can vary from one
company to another; however the rates are 10 to 15 cents per additional mile you drive. You owners of leased cars would be penalized for over the average miles if you traded the car.
If you are somebody who has kids in the household, living in densely populated place, parking your vehicle in unsafe zones, then it is best to opt for a purchase than to lease your car, this is because when you lease you are liable for unaccounted expenses like the wear and tear, damage, and other costs. When your leased vehicle is damaged, the costs can be heavy on you. Hence, it is best recommended to buy your car rather than leasing it if you belong to risk group.
If You Use Your Car For Business
If you are using your leased car for business purpose, then a small percent of your depreciation and finance expenditures are deducted from tax. These are some minor tax saving methods. Although, the IRS has guidelines based on which the tax deductions on your leased automobile is estimated, there are parameter that is relied upon for The parameters are vehicle cost, miscellaneous elements like the gas and maintenance and the percentage of the usage of car for business activity.
You Can Lose Money If You Exit During Lease Period
Leasing is a best option for those wanting to use the car for a minimum duration of 5-6 years. So, you are sure that you would continue use of your car for 5 years, then you must opt for leasing process than owning the car, this way you can prevent overpaying the loans for the full purchase of the vehicle, but if you withdraw during the leasing term, then you may end up losing money than benefiting from the leasing strategy.
However, the truth be said, on the long run more observable savings are made if you complete the purchase of your car especially when the mode of payment isn’t made via loans. The cost of owning is relatively lesser beyond a 5-year scale compared to leasing expense that is mostly beneficial for a short duration.
There are other numbers of factors that determine the long-term benefits raked out of leasing the car. Such as the individual’s preference, modifications, sound system installation and if you would like to avoid expensive repairs on your old automobile then leasing might be the best option for you.
People who just want to own cars and like to have them often exchanged would find leasing more favorable. They can experiment with variety and without having to deal with the high expense and not having to worry about having to dispose of the car going from one dealer to another or finding the right buyer.
For a more precise manner to decide if you must buy or lease your car, you must take into consideration the following factors, annual depreciation of your automobile, loan needed for the purchase, lease fare and the savings from leasing a car.