should i lease a car
TRANSCRIPT
For those choosing to finance their purchase, in recent years the terms of those loans have been getting longer and longer.
With this longer period of financing the purchase comes lower monthly payments,
but over the length of the finance period the buyer will end up paying more in interest on
the loan.
So many buyers have been turning to leasing their new car, which in essence is really just
another way of financing their purchase.
The biggest difference is that by leasing a vehicle you are never the legal owner of the
vehicle, you are by law the lessee.
This form of purchasing a new vehicle has become so popular, that so far this year 62% of individuals who purchase a Lexus model have done so by signing a lease for the car.
From a strategic standpoint for auto manufacturers, when an individual purchases a vehicle with a lease period or 24 to 36 months,
they often turn around and lease another vehicle from that same manufacturer.
There are drawbacks to leasing that buyers need to be aware of before they lease a car
and sign the dotted line.
With a lease comes mileage limitations or restrictions that typically are set at either
9,000, 12,000 or 15,000 miles.
When I am in a cab, I sometimes watch the meter as the cost of the ride accumulates for
every quarter of a mile driven.
If you sign a lease and go over the number of miles agreed upon in your lease contract, your vehicle kind of becomes a cab, because for every mile you drive above that agreed
upon figure you will be paying a mileage fee.
If you don't estimate your mileage needs properly going into the lease, these mileage overage charges can mount up quickly and
can end up costing you dearly.
I have equity in it and if I choose to sell it today I would be able to retrieve that equity
through the sales price.
With a leased vehicle you are essentially just renting the vehicle and you are not building
up any equity.
When the lease is over, you either start the process over by signing a new lease, or you finance your new purchase, both of which
come with new monthly payments that you must make.