Buying a car will be one of the toughest decisions, second to buying a house. What if there was a way to make getting a new simpler? Leasing a car can lift the burden of making a tough decision.
Car leasing has always been popular with businesses needing a fleet of cars. Leasing has become more popular recently among young people unable to buy a car and those looking to build their credit. In the UK, more than 1.6 million people now choose to lease instead of buy vehicles, and according to Which, compared to 35 percent of new cars are financed.
Let’s look at why car leasing is a popular option.
You Have More Options
You might be limited to the kind of car you can buy depending on the type of financing you get. Compared to buying, leasing gives you more options. Whether you need a family SUV, want to try an Electric car, or prefer the luxurious side of life, there is a leased car to suit everyone’s taste, needs, and budget.
With the help of a comparison site or a car lease broker like Lease Loco, you can find the car of your dreams that fits your needs and is within your budget. Lease Loco offers a wide array of options for you to choose from. Have a look at the Lease Loco and select your ideal car based on your needs, budget, and lifestyle.
Your Monthly Payment is Lower
Often, businesses and individuals believe that leasing is an expensive process since it is a long-term commitment to a provider that must include interest, end-of-lease trickery, and other hidden costs.
Generally, a car’s monthly lease payment is lower than a traditional vehicle finance loan. A lease is a contract that covers vehicle depreciation over the lease period, along with fees and tax payments.
Car loan payments are usually higher than lease payments when you buy a car. In addition to interest and sales taxes, all expenses and fees related to the purchase of the car are included in the loan.
Upfront Costs are Less
There are generally four up-front costs involved with a car lease:
- The first monthly payment.
- A refundable security deposit (which might be waived depending on the lender).
- Capital cost reductions (down payments), as well as taxes.
- Registration.
- Dealer handling charges.
Depending on the vehicle’s value, leasing fees can be lower or higher than financing fees. Your monthly deposit will be lower if the upfront cost is higher in a car lease.
The cash price of a car, a downpayment, the registration fee, and any additional charges are all up-front costs when buying or financing a car. Depending on the vehicle’s value, down payments can be higher than lease fees.
Warranty Coverage
You can expect your manufacturer’s warranty to cover most maintenance and repair costs during the lease term. It is typical for the warranty period of a vehicle’s manufacturer to match its lease term, as opposed to financing it. A warranty specifies the manufacturer’s coverage responsibilities. A new car lease offers the benefit of lowering or eliminating unexpected repair and maintenance costs.
Manufacturers’ warranties usually cover the following:
- Various components of the engine.
- Transmission faults, including manual/automatic transmissions.
- Ignition and fuel systems.
- Issues with steering.
- Issues related to the suspension.
- Parts for brakes.
- The cooling system.
Under the manufacturer’s warranty, you are covered against major mechanical problems with your lease car. Normal wear and tear, however, is not covered, nor is anything other than fair wear and tear considered. This would fall under a maintenance package.
Regularly Drive New Cars
When your lease ends, you can return the car, you can simply replace it with another. The leasing system gives you access to the latest advances in car technology every few years. At the end of the lease term, you can typically purchase the leased car, and manufacturers usually charge processing fees in addition to the vehicle’s residual value. Leased cars could be a good investment if you can buy them for less than their market value.
Final Thoughts
The main difference between leasing and financing a car is the outcome. With car financing, you borrow money from a bank, finance company, or credit union over a specific period to gradually purchase your car.
Leasing agreements allow you to essentially borrow a car for an agreed period of time and with a mileage limit. Not only will your monthly payments be less than car financing loans, but you will also get a brand-new leased car at the end of your term.