When you plan to have a car, it might be good to assess what would be a good option – to lease or to buy, because with a lease, you receive a new car up to a certain period of time and will not be burdened with selling the car later on, but instead you just hand over the keys to the car dealer and apply for a new lease; however, when you buy a car, each payment you make builds equity and as soon as you pay off the car loan, the car is yours and you can sell it for a new car later. The best option for those who have limited budget is to lease a car since the primary benefit is the low monthly payments, which is normally half of the car loan payments for the same car and same term, which makes leasing more reasonable.
Still, there are additional benefits in leasing a car, and these are: option of no down payment, but you need to pay the first monthly payment, including the registration fees and official tag; you can drive a new car every 2 to 4 years and a luxury vehicle can be leased still for a low payment than the car loan payment; leasing a car still covered by the manufacturer’s warranty means the repairs are also covered and some leasing company offers free routine scheduled maintenance in the lease terms; proportionate sales tax payment means you are taxed on a portion of the value of the period of lease and which is spread out and included in the monthly payment; and there is automatic free “gap” protection in case of accident or the car is stolen and which pays for the car when insurance will not cover the full loss.
The disadvantages in leasing a car are: no ownership equity, you will be charged for extra miles covered for a specified per mile rate, you will be charged for serious or excessive wear and tear of the leased car, and high credit requirement.
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Before deciding to lease, it’s best to ask for a blank lease contract so you could study well the terms since different dealers and financing institutions provide their own versions of car lease agreements. The features of a car lease contract or agreement contains a Federal Law requirement, which is titled”Federal Consumer Leasing Act Disclosures”, which are sections where certain facts and figures are disclosed to you, such as: amount due at signing, monthly payment, other charges, total of payments, total of finance charges, amount due at lease signing, how monthly payment is determined, early termination statement, wear and tear explanation.The Beginner’s Guide to Cars