When Does It Make Sense To Lease A Car?

Does It Make Sense To Lease A Car

It’s easy to get excited about a new car. After all, the latest models deliver excellent fuel economy, state-of-the-art safety features and tons of electronic gadgets. Busy moms and dads can find hybrids that balance work and play with space for everybody. Outdoors adventurers can pick out something that caters to their fun-loving lifestyle. When does it make sense to lease a car?


Does It Make Sense To Lease a Car?

When it comes to getting behind the wheel of your favorite automobile, you have two main options: financing and leasing. With financing, you take out a loan that lets you buy a brand new model from a dealership. You generally have to make a down payment, and then the rest of the loan amount (plus interest) is divided into monthly installments.

Once you finish paying off the loan, you receive the car’s title and it’s 100% yours. Leasing is another method of obtaining the car of your dreams. This option is similar to renting an apartment. You sign a contract — called a lease agreement — that gives you permission to use the new vehicle for a certain period of time. Most car leases last for two or three years, though some come with terms of 39 months.

Which option is best? That depends on your circumstances, personality, hobbies, and lifestyle. For some people, leasing makes more sense than buying. Other Americans prefer financing vehicle purchases and owning their cars for a long time. When does it make sense to lease a car?

What Are the Pros and Cons of Leasing a Car?

A lease can be an attractive option for getting into a new car. Before signing on the dotted line, however, it makes sense to know the advantages and disadvantages of leasing compared to a car loan.


The Advantages of Leasing a Car

The pros of leasing revolve around the freedom and flexibility provided:

Frequent upgrades

Leasing only locks you into payments during the term of your contract. After two or three years, you can get something completely different. Whether you want to switch to a truck, hybrid SUV, luxury automobile or sedan is totally up to you.

No hassle

Once your lease ends, you simply return the vehicle and choose a new one. You don’t need to deal with selling a used car.

 

Less stress

Since new vehicles under lease come with a warranty, you don’t have to worry about breakdowns. If you notice a problem, you can take your car to one of our dealerships for fast, professional and high-quality repairs.

 

Lower monthly payments

Generally speaking, lease payments are smaller than loan payments for the same car. This can be an advantage when it comes to balancing your monthly budget.

For people who love to stay up-to-date with the latest cars and trucks, this level of freedom is irresistible. Can you picture yourself driving the same car for five years or more? If not, then leasing is probably a perfect fit for you.

 

The Downsides to Leasing a Car

Leases aren’t always rainbows and butterflies. There are times when it makes more sense to apply for a car loan instead. Here are some of the cons of leasing:

Insurance liability

Under a lease, you generally need to spring for gap insurance coverage. This protects the vehicle in case of theft, damage or loss.

 

Higher total purchase price

While monthly payments are usually lower with a lease, you’ll probably end up paying more in the end. As long as long-term ownership doesn’t bother you, you can usually save a significant amount of money by financing your purchase.

Less personalization

While a lease does let you customize the level of trim and other amenities for your vehicle before driving it off the lot, aftermarket personalization isn’t usually allowed. Drivers who want to add a spoiler, custom paint jobs or special rims may get frustrated by lease rules.

 

Credit score requirements

Surprisingly, it can actually be harder to qualify for a car lease than a loan. Many leasing agreements require a credit score of 700 or more. Of course, you can find out if you qualify ahead of time.

If you’re the kind of person who falls in love with a car and can’t imagine driving anything else, then opting to buy is probably a better choice. With financing from Valley Chevy, you can pick out a truly amazing car and then customize it completely to your wish list.


When Does Leasing a Car Make Sense?

A big draw of leasing is that luxury cars are usually more accessible. Even if you don’t have enough cash lying around to buy a brand new Chevy Corvette Stingray, you can still hit the road with this legendary supercar.

Affordable monthly lease payments let you pull into the parking lot at work with a cherry-red, pulse-pounding ride guaranteed to turn heads every time.

Here are a few other situations where leasing is an excellent option:


1. Taking Advantage of Lease Offers

When one of our dealerships has a special offer related to leasing agreements, it’s a great time to check out the potential benefits for your wallet. These events may offer zero-money-down savings, increased mileage limits or waived fees. Not only do you get to enjoy lower monthly payments, the total cost of your contract agreement may end up rivaling or beating a car loan.


2. Maximizing Tax Savings on Business Vehicles

Leasing can be a great option for business owners looking to build out the company fleet. If you have a small business, a lease makes it easy to pick out an impressive sales vehicle that reflects well on your reputation. Larger corporations can maximize tax benefits for multiple cars and vans with a lease.

Leasing also has benefits related to deducting expenses for business taxes. You can usually take off the full amount of your monthly lease, no questions asked. This can provide significant tax advantages for business owners. Loans are more complicated since you have to factor in things such as depreciation. This can cut down on your total tax savings or stretch the benefits out over many years.


3. Living Your Life the Way You Want

If you only need a car on a temporary basis, a lease is probably your best option. Leasing lets you use a new vehicle for a short time and then walk away with no strings attached. If you’ve been hired for a two- or three-year project in a different part of the country, it may make sense to sign a lease at your new location.

When you’re commuting a lot, you want a car that has a great balance of fuel economy and driving power, such as a Chevrolet Spark or a turbo-engine Trax. On the other hand, if you suddenly need something for driving around town, running errands and dropping the kids off at school, the extra-spacious interior and 5-star NHTSA safety rating of the Chevy Equinox may be a better fit. Having a lease lets you adapt pretty easily to lifestyle changes.


4. Staying Up-to-Date With the Latest Car Safety Features

Car safety has advanced significantly in the last decade. Many modern vehicles come standard with built-in tracking software, driver assist systems, sensors, rear cameras, and advanced braking technology. Things such as automatic emergency braking, lane departure warning and adaptive cruise control help to keep your family safe. These features contribute to excellent safety ratings. There are even teen driver features that make sure teens wear seat belts when driving and limit the volume of car speakers.

If you want a vehicle with cutting-edge safety technology, leasing can be a great way to get it. In two or three years, you can drive home another brand new car, taking advantage of further improvements to safety. Yesterday’s optional upgrades often become today’s standard features.


5. Freeing Up Cash for Other Purchases

Homeowners and business owners may want to spend as little on monthly car payments as possible. In that case, a lease is often the best choice. If you have a small business, keeping vehicle costs down frees up capital for other uses. You can maintain strong cash flow while still investing in marketing, training, inventory purchases and other needs.

If you’re a technology enthusiast, then it may make sense to lease so you have the cash to buy the newest gadgets. With the money you save on car payments, you may be able to afford a new iPhone, laptop or tablet. In other words, sometimes it’s worth it to spend more in the long run in exchange for being able to get all the things you want right now.


Tips for Deciding Whether a Lease Is the Right Fit

Before deciding whether to lease or take out a car loan, it helps to do some research. For example, it makes sense to learn about how much Arizona sales tax you need to calculate for a vehicle purchase versus a lease. This can help you make the right decision when it comes to financing.


Research Your Credit Score

It’s helpful to know your credit rating before settling on financing or leasing. To get the lowest monthly payments on a lease, it’s important to have very good or excellent credit. You can contact one of the three major credit bureaus for a free annual credit report.

Of course, even if you don’t have amazing credit, there’s a good chance you can still drive out of the lot with the vehicle you want. However, with a less-than-ideal credit score, it can be advantageous to opt for in-house financing instead of a lease. This can save you a lot of money in the long run.


Calculate Your Car Budget

The next step is to know how much money you have available for your new car. Try to include all the needed expenses related to a vehicle, including required insurance and taxes. To maximize your benefits with a lease, you need to be sure you can make payments on time every month.

Don’t forget to write down what portion of your savings you’re willing to use for a down payment. If you time it right, you may be able to score a lease with zero money down. If you decide on a loan instead of a lease, you probably need to have enough for a 10% or 20% down payment. On a $30,000 vehicle, you would need to plan on a down payment of around $3,000–$6,000.

It’s easiest if you work backward: Decide how much you can afford to spend each month before you start looking for a car. That way you have a pretty good idea what kind of car you can lease ahead of time. This year’s Chevy models are awesome, and it’s easy to get carried away with all the high-tech options you can add.


Check Out Available Lease Rates

Is your budget enough to lease the vehicle you want? Can you save money by financing a purchase directly? To know the answers, you need to check how much available leases cost for your specific vehicle. It's also good to read the fine print. That way you know about any fees you have to pay at the end of the lease, such as if the vehicle has excessive wear and tear.


Apply for Prequalification

Prequalifying for a loan or lease doesn’t cost you a thing, and it’s a big help. Knowing whether or not you qualify ahead of time tells you if leasing is an option. Of course, this step only provides a rough estimate, but it gives you a pretty good idea of what to expect. Even better, being prequalified can shorten the time needed for final approval.

Calculate Capital Cost Reduction in Lease Cost

A common mistake when planning a car lease budget is skipping the capital cost reduction. This is similar to a down payment, and it lowers the price of your monthly lease. When calculating whether leasing or financing is better for your family, make sure to include the capital cost reduction in your estimates.

Decide Whether You Want To Deal With Repair Costs

A big part of choosing whether to buy or lease is how fond you are of handling repairs. With a lease, your vehicle is generally under warranty, so our dealership takes care of everything. When you own a car, you’re responsible for necessary fixes after the warranty period ends. Leasing offers zero stress when it comes to maintenance and repairs, but DIY-enthusiasts may enjoy the freedom to upgrade that comes with purchasing.


Think About Your Lifestyle

One of the biggest clues to whether leasing is right for you are your past purchasing habits. Do you tend to go for the latest gadgets as soon as they come out, or do you prefer getting the best deals instead? How long did you own your last car? For frequent upgrades, major wow factor and cutting-edge technology, you can’t beat leasing.


Know Your Annual Mileage

Many leases have annual mileage limits. Going beyond a certain amount can incur extra fees. Ours are typically pretty generous, but it still pays to know your driving habits. If you have a long daily commute or love taking cross-country road trips, you may want to buy a car instead of leasing. That way you can add all the highway miles you want without worrying.

Once you know how much you can spend, it’s time for the best part: searching for a new car you love. The total purchase price affects your monthly lease payments, so it’s a good idea to choose the trim and upgrades you want before signing. There’s no right or wrong when it comes to add-ons, the whole point is to pick a personalized vehicle that’s going to make you happy. This puts state-of-the-art security features well within your reach on any model, such as forward collision alert, automatic emergency braking and lane keep assist.

Leasing can help you drive a new car that you may not be able to afford through traditional financing. For example, if off-road excursions are a big thing in your life, you may want to take your Chevy Trax to the next level with an all-wheel-drive Premier trim, fog lamps, roof-mounted side rails, projector beam headlamps and a Bose seven-speaker audio system. The time to make these decisions is before you sign the lease, not afterwards.


Questions To Ask Your Valley Chevy Dealer About Lease Options

To make the leasing process as easy as possible, we’ve put together a list of helpful questions you can ask when visiting your nearest Valley Chevy dealership. We want you to make the best decision for your family, hobbies and budget:

  • What are the mileage limits on this lease?
  • Do I have to pay anything at signing? If so, how much?
  • Are there any lease deals going on right now?
  • What incentives are available for leasing or financing?
  • Do I need to pay any additional fees?
  • Do I have to get gap insurance? If so, how much does it cost?
  • What happens if I miss a payment?
  • Can the lease be extended

We highly recommend asking “what if” questions. There’s nothing wrong with wanting to know what happens if you get into an accident under your lease, for example. At Valley Chevy, our focus is on helping you get the car you want. We offer a variety of options for leasing and buying, so the most important thing is making sure you’re happy. Our dealers are friendly, knowledgeable and honest, so they can walk you through the pros and cons of leasing for your personal circumstances.

Our website has a lot of helpful information about leasing costs and list prices for your favorite cars. We’re also happy to answer your questions directly. Call or visit the nearest Valley Chevy dealership for one-on-one assistance getting the best deal on a new car.