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What is a Lease, and When Should I Consider It?

 


Shopping for a vehicle is an exciting time for anyone, whether you’re a teenager hoping to drive off the lot in your first new car or a mom looking for the perfect SUV to fit the family into. While today’s new vehicles offer plenty of customizable options to choose from, which makes the car-buying process all the more fun, determining if you should lease the vehicle should be your first priority before you step foot inside the Young Auto Mall in Logan, Utah.But what is a lease, and when should you consider it? Read on to learn more about this convenient car-buying option.

What is a Lease

When shopping for a new or used vehicle at an auto dealership, you can either lease or finance it. Contrary to financing, which demands that you pay for the total cost of the vehicle after a specified number of years, leasing requires that you only pay for a portion of it during the time that you drive it. The portion you pay covers the approximate amount of depreciation the vehicle will suffer during the lease.Although it's possible to lease a used vehicle, most people opt to lease a new one because it allows them to drive a better car without having to pay for its total value. While most vehicle leases range from two to five years, the most financially advantageous lease to the car buyer is done in three-year terms. Remember that you'll still have to pay interest on the vehicle; this interest is stated in your lease agreement as a 'money factor' and a small percentage. If you multiply it by 2400, it'll resemble your annual percentage rate.

When Should You Consider Leasing a Vehicle

Your monthly cash flow, your available savings for a down payment, your driving habits and how well you preserve your vehicle are all factors to consider when debating whether to lease a vehicle. Leasing a vehicle isn't the best option for every car buyer, so it's important that you take these considerations into account before deciding to lease.If you claim your vehicle as a business expense, leasing is definitely the most beneficial option for you, since you can deduct leasing costs attributed to business purposes. If you don't mind not having equity in the vehicle and plan on leasing another one once your lease expires, then leasing is likely also the best option for you.Here are some other reasons you might consider leasing a vehicle:
  • You have a good credit score.
  • You won't drive more than the miles you're limited to annually.
  • You want lower monthly payments.
  • You currently have a stable family life and job.
  • Your job and/or lifestyle demands that you always have a new vehicle.
  • You take good care of your vehicle*.
*It's important to note that while you'll likely receive a wear-and-tear allowance when leasing a vehicle, you'll ultimately be responsible for its condition when you return it. If you try to return the leased vehicle with bald tires, torn fabrics or dents, you'll likely get charged to have all of those issues fixed if your allowance doesn't cover the damages. When leasing a vehicle, remember that it's not explicitly yours. You need to take good care of it to avoid additional expenses.

What are the Benefits of Leasing a Vehicle

One of the biggest benefits of leasing a vehicle is that you'll never get tired of driving the same car; you'll always have access to the newest vehicles on the market. Here are some of the other benefits people who lease a vehicle enjoy.
  • Enjoy lower monthly payments with a low - or no - down payment.
  • Drive a better vehicle without paying the full price for it.
  • Pay lower repair costs because you're always under the vehicle's factory warranty.
  • Transition to another new vehicle every two to five years.
  • Avoid trade-in hassles once your lease term ends.
  • Pay less sales tax for a leased vehicle.

Which Mistakes to Avoid When Leasing a Vehicle

As with any other major purchase, you want to avoid mistakes that could end up costing you more when you least expect it. With that in mind, here are some common mistakes you should avoid when leasing a vehicle.
  • Paying too much for a down payment.
  • Forgetting to obtain gap insurance, which helps avoid paying the total cost of the car if it's wrecked or stolen.
  • Underestimating how many miles you drive annually and paying for it later.
  • Treating the vehicle recklessly and not taking care of it.
  • Leasing the vehicle for too long; three years is the sweet spot.

What Questions to Ask When Leasing a New Vehicle

When you walk into the car dealership, you should have a set of questions prepared to ensure the leasing agreement you sign fits your budget and lifestyle. Here are some of the most important questions you should ask.
  • Are you offering any leasing specials at this time?
  • What is the vehicle's residual value? The higher the value, the better your monthly payment.
  • What will be my interest rate for the term of my lease?
  • How many miles would my lease include, and can I purchase more upfront?
  • What fees do I have to pay to drive off the lot?
  • What other fees should I expect that are included in the lease?
  • Can I transfer the lease to a new owner before it expires?
  • What if I want to lease another vehicle before the lease expires?
If you're ready to lease a new or used vehicle in Logan, Utah, stop by the Young Auto Mall today. Our sales and service teams are standing by to help you drive off the lot in the car of your dreams, without paying a hefty price for it.
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