leasing a new car
It doesn’t matter if your leasing a new car, truck or suv, the same principle applies to all three.
See my other articles on buying a used car and on buying a new car. Leasing a new car is similar to buying except after 3 years you have to give the car back! It’s kind of like renting a car long term. When you rent a car, you have full use of it but it’s limited to your rental agreement. At the end of the lease you have to give the vehicle back too. In essence Leasing a new car is a long term rental with the option to buy at the end of the 3 years.
Depending on your situation, Leasing a new car can be a good alternative to both buying a new car or buying a used car. If you plan on always having a car payment, then leasing a new car every 3 years could be a good option. You don’t lose on a trade in because when your lease is up, your out, give the car back. If you bought the car then after 3 years you would have to trade your car in. When leasing there are no worries of losing money on your trade in.
When leasing a new car
There are other things to keep in mind like you can’t bring that vehicle back with any kind of damage. It needs to be very well taken care of because, if it has damage, then you’ll be hit depreciation charges that could run very high. The mileage usually can’t exceed10k miles a year on most leases with an additional charge for every mile over the 10k. You really need to know how many miles you average a year in order to determine if it’s gonna work for you.
Leasing a new car usually you can pay for the overage at the beginning of the lease before you use them because you get a discount if you pay up front on the excessive mileage. Say at the end of the lease you go over the mileage by 2k per year times 3 years is 6k miles and it’s say 0.27 cents per mile. This equals $1,620 over the 3 year period but if you purchase the excessive miles beforehand then they would give you a discount of say 0.17 cents per mile = $1,020 which would be a $600 savings over the 3 years.
This only works if you know how many miles you average per year and you can pin the miles close so you don’t run into any surprises at the end of the lease. Another point is the total vehicle price. The total price doesn’t have such a huge impact on a lease because it’s only based on 3 years and makes getting in that vehicle a little easier with a lower monthly cost.
When leasing a new car I don’t want to forget a key component to all this; you have to have “A tier” credit to get the best rates. At the time of this writing, a FICO credit score of 750 or above will give you the best rates. The dealership will pull all 3 credit bureau reports and scores then take your highest score to qualify you.
Leasing a new car conclusion
It is nice when Leasing a new car that your driving a brand new car every 3 years with no stress of repair bills or having to worry how much money it will be costing you over and above the initial purchase. The money for those periodic maintenance repairs that come after 40k miles or so can be some what expensive. When you put it all together leasing a new car has it’s good points and it’s bad points but overall with the cost of buying a new car, it could be a good alternative to a new car purchase.