Leasing

When you lease, you pay only a portion of a vehicle's cost, which is the part that you "use up" during the time you're driving it. Leasing is not the same as renting. You have the option of not making a down payment, you pay sales tax only on your monthly payments (in most states), and you pay a financial rate, called money factor, that is similar to the interest on a loan. You may also be required to pay fees and possibly a security deposit that you don't pay when you buy. You make your first payment at the time you sign your contract — for the month ahead. At lease-end, you may either return the vehicle, or purchase it for its depreciated resale value.

Car leasing can offer advantages and be an attractive alternative to buying, although it's not for everyone.  Here are some advantages and disadvantages to leasing which will help you decide if it’s right for you.  We also encourage our customers to come in and talk with one of our trained sales associates who can go over both options with you on the vehicle of your choice. 

Because you only pay for the portion of the car or truck that you actually use, your monthly payments are 30%-60% lower than for a purchase loan for the same car and same term.

Since your monthly payments are lower, you get more car for the same money and drive a new vehicle every two to four years, depending on the term length of your leases.

Most people like to lease for a term that coincides with the length of the manufacturer's warranty coverage so that if something goes wrong with the car, the repairs are always covered.

Down payments on a lease are usually much smaller as well. Generally you will pay a deposit of your first monthly payment, as well as tax, title and registration fees where applicable. You may elect to pay a larger down payment to reduce your monthly payments.

With leasing, the headaches of selling a used car are eliminated. When your lease ends, you simply turn it back to the leasing company and walk away, unless you decide to buy it or trade it.

Most leases automatically include free "gap" protection in case your vehicle is totaled in an accident or stolen, and you still owe more than the vehicle is worth. Loans do not generally come with gap protection.

There are most likely fees involved in the early termination of a lease, fees for which you will be responsible to pay.  Make sure you read all the fine print before signing your lease contract.

Leasing a car can bring on higher insurance rates since you may require more coverage than you're used to paying. Contact your insurance agent to get an idea of what you insurance costs will be before signing a lease.

Most leases have a limit on the number of miles you may drive, usually anywhere between 12,000 and 15,000 allowable miles per year. Excessive mileage equals more money, usually about 10 to 15 cents per mile over the agreed upon yearly figure. This can add up fast, especially if you drive a lot.

Like mileage, there are limitations on the wear of a vehicle under a lease. Exceeding these wear limitations may result in more fees.

Since the car you will be driving belongs to someone else, that someone else needs to be confident that you will keep the car in good condition and make your payments on time. This means that credit requirements are more stringent on potentially leasing a car. Therefore, if your credit history is spotty, your chances of getting approved for a lease will be spotty as well.

Is having a new vehicle every two or three years with no major repair risks more important than long-term cost? Or are long term cost savings more important than lower monthly payments? Is having some ownership in your vehicle more important than low up-front costs and no down payment? Is it important to you to pay off your vehicle and be debt-free for a while, even if it means higher monthly payments for the first few years?