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Reasons to lease instead of finance your new car in 2015

Updated on March 24, 2015

Why lease your new Car?

The author has been in the car business for over 25 years, selling and leasing Cadillacs, Conversion Vans, Chevrolets, Hummers, Jaguars, Lexus, Kias, Volvos and used cars. He has worked at car dealerships and lots in California, Utah, Virginia and New Jersey as a salesman and as a manager. Listed below are 14 reasons to lease instead of finance your new car.

The author has chosen to use the reference of “he” instead of “he/she” to make for easier reading.


ALWAYS UNDER WARRANTY – The factory warranty is the same whether the vehicle is purchased or leased. Because most lessees chose shorter terms than those who finance their vehicles, the leased car is usually under factory warranty for the entire term. Extended warranties and maintenance plans are available through the business office.

BUY EXTRA MILES IN ADVANCE – If the lessee thinks he will drive more miles than what is allowed by the terms of the lease, he may purchase extra miles in advance. The miles that are purchased in advance at the signing of the lease are less expensive than the surcharge for excess mileage at the termination of the lease.

Can’t Get Out OF Lease – At first glance this seems like a valid objection, since the lease does require the lessee to make all of the contracted installments. Most leases have terms of 36 or 48 months. In effect, the lessee is in a negative equity situation for the entire term of the lease. However, an owner who has financed a car and only paid taxes and tags fees as a down payment will be in a negative equity situation for probably at least five years of a six year term. In both cases the lessee and owner will have to take a loss in order to terminate their contracts early, but the lessee will be able to so years before the person who financed his car.

DRIVE TOO MANY MILES TO LEASE – Some lessees know that they will be driving a lot and are concerned about the mileage penalty at the end of the lease. The fact is the excess mileage charges are lower on a leased car than they are on a non-leased car that is being evaluated for trade-in value or just being sold to the public. Excess mileage fees may differ slightly from make to make and between inexpensive and expensive car. For example, a luxury vehicle may have an excess mileage fee of thirty cents per mile. Typically the book deducts about thirty five to forty cents for the miles that exceed the contracted mileage allowance. With a financed or owned car the owner will get less money on a trade in or if he sells it himself. So, it is to the driver’s financial advantage to lease the car instead of owning it.

GAP COVERAGE (Gap Insurance) – Gap Coverage covers the delta between the book value of the vehicle and what is owed on the lease contract. This coverage, designed to protect both the lender and the lessee, is mandatory on all leases. With a vehicle that has been financed that does not have Gap Coverage, should the owner be in an accident he would be responsible for this delta.

GUARANTEED PURCHASE PRICE - The lease contract specifies the guaranteed purchase price at lease termination. The Lessee has the option to either turn in his leased vehicle or purchase it. For the lessee who has maintained his car in pristine condition with low miles, he may choose to purchase the car and then sell it for a profit. Very few people take this option. Some leases require a “turn-in” fee to cover expenses related to inspections and transporting the vehicle to a central location. Sometimes this fee is waived if the lessee leases again.

INCENTIVES TO LEASE AGAIN – Most manufacturers offer an incentive to buyers coming off of lease to lease again. Often times these incentives include an offer to forgive the lessee’s last three payments if they lease again. Sometimes the incentive is a waiver of the first payment on the new lease.

LOWER MONTHLY PAYMENTS – Lease payments on a new car or truck are usually one third to one half lower than finance payments, because the lessee is only paying for the portion of the vehicle that they use.

MORE CAR FOR LESS MONEY – Not only are lease payments comparatively lower than finance payments, the lessees can also drive upgraded models instead of base units. Since the lessee is only paying for the portion of the car that they use, their monthly payments may be comfortably low enough that they may opt for other products available through the business office, or even a different car with more equipment for a slightly increased monthly payment.

NEW CAR MORE OFTEN – The manufacturers want to see as many of their cars on the road as possible so they subsidize (buy down) the rates and residuals to make the lower term leases attractive. This lowers the monthly payment for the lessee and gives the factory another crack at leasing him a new car. This allows the lessee to switch into a new car more often.

NO TRADE IN – At lease termination the lessee has nothing to trade in since he does not own the vehicle, so when negotiating on his next vehicle he does not have to go through the trade in hassle. He returns the leased vehicle to the dealership, signs an odometer statement and condition report, turns over the keys and he is done. Fast and clean.

ONE PAYMENT OPTION - Another objection to leasing is that the customer does not want have to be burdened with making monthly payments. For this customer a “One-Pay” lease contract is a great choice. This option allows the lessee to make one payment at lease inception that covers the entire term, usually with a discount on the lease rate of one half of a percent.

OPTIONS INSTEAD OF OBLIGATIONS - Suppose that you have a three year lease on a vehicle. Suppose also that the vehicle is involved in an accident which results in $18,000 of damage. Car insurance takes care of the repairs but when the lease is up the lessee might decide he does not want to own a vehicle that has been damaged to the tune of $18,000. On the other hand if the lessee has fallen in love with his car, or perhaps the car has very low miles, then if he decides that the purchase price is acceptable, the lessee may choose to purchase the car for himself or maybe a family member. At this time he may choose to have the dealership “Certify” his car which is an extension of the new car factory warranty. This option is available for at an additional cost to the buyer.

The third option is to turn in the car and then lease or purchase a new vehicle. The factory usually offers incentives for the lessee to lease with them again. After their first lease many people choose to lease again and again.

OWN MY CAR – A lot of car shoppers shy away from leases because they feel that they don’t own anything. The average driver trades in or sells his car every four to five years. But since very few people drive their cars into the ground, do they really ever own them?











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