Considering the possibility of leasing a car? Here are some great tips to guide you through the advantages and disadvantages of leasing, to make a decision that makes you happy in the end.
Buying a car can be a daunting task. Deciding which model is right can be difficult, especially since people generally keep a car for many years before replacing it. For buyers looking for more flexibility in their shopping experience, leasing can be a great option.
Types of leasing
According to the experts at diamondcontracthire.com, there are two main types of leasing: closed leasing and open leasing.
Closed-leasing means that at the end of your rental period, you just have to return the car. If it has any unusual wear or tear, or you have exceeded the allowable mileage, you will have to pay for it; but there are no additional obligations apart from this.
In open-leasing, you agree to purchase the vehicle, at a predetermined price, at the end of the rental period. People who drive a lot, as well as many companies, usually use this method. Although, for most consumer groups, a closed-type rental agreement is recommended as it has less risk at the end of the rental period.
The advantages of a leasing car
There are many positives when it comes to leasing a car. Perhaps the most important benefit is the low costs when acquiring it, as well as its maintenance.
Here are some more advantages of leasing:
- Lower monthly payments.
- Very low or zero down payment.
- Maintenance costs are included.
- You can have a more expensive model for less money.
- Sales taxes are paid over the entire term of the contract.
- For those who use the vehicle for their business, there are possible tax benefits.
- Possibility of having a new model every few years.
A lease is, in essence, a car rental for a specified number of months. Therefore, you only have to pay for the use (depreciation) of it during that period. You are not required to bear the costs of total vehicle depreciation, which is a great advantage over buying one.
The disadvantages of leasing a car
There can also be some negatives when it comes to leasing. A big disadvantage is that you will always have to make a payment for using it. For those who don’t like to have recurring payments and pay for things in advance, leasing may not be appropriate.
Another drawback is that you will never own the car while you are renting it. Although, normally, you will be given the option to purchase it at the end of the rental term for a predetermined price.
Here are some other disadvantages:
- Depending on the terms of your rental agreement, there may be mileage restrictions.
- Insurance is usually more expensive for rental vehicles.
- If for any reason you need to end the contract early, you will have costs for early cancellation of the contract.
- There are possible costs at the end of the rental agreement (for example, excess wear and excess mileage charges).
- It is important to recognize that with leasing, you are paying for the most expensive years of a vehicle’s life.
Your monthly payments are determined by the difference between the purchase price and the residual value of the car at the end of the rental term. As we all know, the value usually drops very quickly in the early years. Although this can be avoided by searching for models that have a lower historical depreciation rate and are good at retaining their value.
Three things to keep in mind when leasing a car
1. Be wary of dealers who try to offset more of the depreciation costs by setting an unfair and low residual value for the vehicle at the end of the rental period.
2. Before signing the rental agreement, be sure to carefully read all the conditions. Pay particular attention to the points regarding how the dealer defines “excess wear and tear” as well as how high the cost of excess mileage is. It is best to minimize all additional surprise costs at the end of the lease.
3. Spend some time shopping around online for the best deal to suit your needs. There are lots of leasing companies available, so it’s worth spending some time researching to find something that fits your needs exactly and is within your budget. Some leasing companies even deliver nationwide, so don’t limit yourself to just local dealers.
Avoiding worry by leasing a car
We all know about the need to check the history of the used cars before buying. When buying used, it is possible to find out if the vehicle has an open leasing contract or any suspicion of having been rented/leased previously. But there is still a degree of risk involved.
Checking the vehicle history can inform you of past use of the vehicle. Before buying a used one, it is recommended to enquire about the history of it, including whether it has been written off previously or has outstanding finance.
But when you lease a car, you can forget worrying about such things, and whether you’re getting a good deal or not, or if it has a problematic past. You can be confident about the car you choose to lease. When you lease a new one, you don’t need to worry about the previous history of the vehicle. This makes leasing more transparent and agile.
There are many factors to consider when you need to get a car. Consider for yourself the advantages and disadvantages before making a decision. Intangible aspects must also be taken into account, such as pride of ownership versus the comfort of always driving the newest models. Often it comes down to numbers.
Before you go to the dealership, think about what is best for you and you will feel confident that you have made the right choice.