| In this article, I will explain everything that you need to | | | | a salesman tells you. |
| know about car leasing vs car buying. This article will | | | | Closed end leases: These are less common and are |
| detail the major pros and cons of both, and allow you | | | | what gave leasing in general a very bad name back in |
| to make a well informed, educated decision about your | | | | the 1980's and early 1990's. Closed end leases only |
| next vehicle selection. | | | | give you the option of turning the car back into the |
| If you've spent any time shopping at car dealerships | | | | leasing company. Every ding, scratch, tire wear and |
| and have decent credit, you've probably been pitched | | | | mileage was billed to the customer. This made some |
| by a car salesman about car leasing vs buying a car. | | | | people very, very angry about having been talked into |
| From 20 years in the car business, I can tell you | | | | a lease. As stated, these are less common now and |
| honestly that many people are talked into leasing and | | | | most leases these days open end. |
| are not making their decision based on solid facts. | | | | Details Specific to Buying a Vehicle: |
| There is nothing wrong with a lease, per se. Leasing | | | | - Requires less insurance coverage limits than a lease |
| has it's purpose, just as some prescription blood | | | | - The title is held by the bank or lender, until paid in full |
| thinners have a purpose. It's not equally recommended | | | | - If you get sued for an auto accident, you or your |
| for everyone and can cause some people to get in | | | | corporation has more liability |
| water that is over their heads. | | | | - Vehicle value over years, expenses of ownership or |
| Salesman are trained to basically state, "Leasing is not | | | | standard mileage deduction for tax purposes |
| the cheapest way to own a car, it's the least | | | | - Sales tax is on purchase price only, not on payments |
| expensive way of driving more car for less money." | | | | as with a lease |
| This is technically true, however, not the basis that you | | | | - You pay more in payments and you will actually own |
| should be making this type of financial decision on. | | | | the vehicle at the end of the payment term |
| Details Specific to Leasing a Vehicle: | | | | For most everyone, buying is the best option in my |
| - Requires more insurance coverage and higher | | | | opinion. With a lease you get lower car payments, but |
| insurance premiums as a result | | | | you also have higher insurance premiums as leasing |
| - The title of the car is in the leasing companies name, | | | | companies require you to have higher liability limits for |
| not a lender | | | | comprehensive and collision coverage. |
| - If you get sued for an auto accident, the leasing | | | | Which is the best option for you? |
| company is sued and your corporation is protected | | | | In summary, the main pros and cons of leasing vs |
| - Payments are a tax write off for the duration of the | | | | buying a car are this: If you are a business owner and |
| lease, if the vehicle is for a business | | | | looking to have a vehicle to use as a tax write off and |
| - You pay sales tax on your monthly payment every | | | | to reduce liability, a vehicle lease is a viable option. If |
| month based on your state sales tax rate | | | | you are someone that trades vehicles every few |
| What happens at the end of a lease... | | | | years, a lease is only going to be advantageous to you |
| Open end leases: Salesmen will usually tell you that | | | | if you don't put more miles on the vehicle than you pay |
| you aren't locked in, with a lease. They'll tell you, "If you | | | | for. |
| put too may miles on it, you can just sell it or trade it in, | | | | The only advantage to leasing vs buying a car for |
| rather than turning it back in to the leasing company." | | | | individuals is a lower monthly payment. This comes at |
| While this is true with an opened end lease, which | | | | a price later on down the road. It's only good in the |
| allows for those options, it's not exactly going to be | | | | short term and only if you plan to turn the vehicle back |
| that easy. As you are paying lower payments with a | | | | in without excess mileage or wear and tear. |
| lease vs buying a car, you are paying less money | | | | Why are leases promoted by car dealerships? |
| toward principle and more money for interest charges. | | | | Interest rates on leases are concealed by what is |
| This means that at the end of the lease term, you will | | | | called, a money factor. Leases are primarily based on |
| owe more money on the car than if you were buying | | | | the full retail price of a car, as well. Case in point, |
| it. This makes trading and selling the vehicle much more | | | | dealers make more money on leases than on normal |
| difficult, as you'll find that you owe much more on the | | | | sales. |
| vehicle than it is worth. Simple truth, regardless of what | | | | |