When Does a New Car Lease Make Sense

Let's face it, you love cars. You love to drive a new orbetter deal is because the payments are typically
late model car, the smell of a new car, the feeling oflower than if you had purchased the car. Again, as
new and untapped power under the hood. It is exciting.described above, this depends on the estimated resale
But one of the problems is that your financialvalue of the car after the lease period, but generally
resources are a bit more limited than your dreams are,speaking, your payments will be less. However, since
so you may want to consider a car lease instead ofyou are driving more of the car as an asset or
going out to get a car loan for a purchase.resource with less of your commitment to the vehicle,
The first thing you need to understand is exactly whatyour credit needs to typically be a bit better than it
is a car lease. When you lease a car, it does not meanwould for a purchase or a car loan.
that you own the car. Rather, it is more like renting theThe real beauty of a car lease is that at the end of
car, although there are still many very importantthe lease, you can just turn in the car and slide into a
differences. For example, you still need to pay for thenew lease on a brand new car. This is assuming of
insurance on the car. This is critical because you needcourse that you have not put too many miles on your
to carry full coverage on the car, including collisionleased car. You should have a good feeling for how
insurance, which serves to protect the risk of themany miles you will drive. Standard lease agreements
owner of the car while you have it out on lease. Thisstate about 12,000 miles per year although that can be
insurance is typically more than what you mightadjusted up front if you know you will drive more. Be
normally have if you had purchased the car outright, sovery conscious of how many miles you are putting on
be sure to figure the cost of insurance into your overallthe car, since all miles in excess of what you agreed
cost of driving the car.to when you turn in the car are assessed a pretty
One of the big bright spots with a car lease is that youhefty charge, like 30 cents per mile or even more.
do not worry about depreciation of the car, since youOn the downside of a car lease program, you never
paid for that up front. You see, the cost of the lease isown the car. You have replaced tires, wiper blades,
figured based on how much the car will be worth inpaid insurance on it, but since you are leasing the car,
resale value at the end of the lease. For example, ifyou will never own it and will therefore always have a
the car you want to lease cost $40,000 and at themonthly payment. Contrast that with a car purchase,
end of a two year lease, assuming you have putwhere after the car loan term, you own the car and
about 24,000 miles on the car, the resale value iscan still drive it but you are not making car payments
about $25,000 then the lease payment is figuredanymore.
based on the difference, or $15,000. This is exactly theConsider which option is right for you. A car lease can
reason that you can get a much better lease deal onbe a great deal and keep more money in your pocket,
a car that has a great resale value, instead of a caras long as you can live with the restrictions and
that it pretty much shot after two years.limitations.
Another reason that a leased car can be considered a