Most people have heard of car lease deals. They’re splashed all over dealership windows.
Most people don’t know anyone who’s done it.
Yet, maybe they do. Because leasing is becoming more and more popular.
According to an Edmunds’ report on the lease market, more people than ever chose to lease a new car in the first six months of 2016.
Who is changing the buying trend?
Millennials are. They account for more than 34% of lessees. People do it. And more people are doing it than ever before.
So, people really do lease cars. And more people are doing it than ever before.
But when is it the right option?
Leasing a Car: What It Really Means (And Why It’s Awesome)
Buying a car means purchasing ownership of the car.
The same isn’t true of a lease. Leasing a car means paying the depreciating costs over the length of the lease.
There are distinct advantages to this scenario.
First, lessees are less likely to fork out cash for expensive repairs.
Because they don’t own the vehicle and leases are often shorter than warranties, those repairs are covered.
Second, there’s no long-term commitment to a make or model. At the end of the contract, the lessee can either:
- buy the car from the deal less the residual value
- lease a newer model
- leave the model behind completely
Leasing Comes With a Catch
Let’s return for a minute to what a lease is – paying the depreciating costs of driving the vehicle.
The key to truly understanding what leasing a car is like is to hone in on ‘depreciating’.
Lessees are in charge of what happens to the car while it’s in their possession.
If the door is scratched or the wheel is or the wheel is scuffed, it’s going to be a problem.
Drivers who don’t maintain their car to the standard set in the lease agreement end up paying for it when they return the car.
This is why leasing is not advantageous for every driver. The car begins to depreciate as soon as it leaves the lot. And it’s the lessee’s responsibility to pay for the depreciation.
Plus, the standard lease agreement allows mileage between 9k and 15k miles every year.
So, even if the car itself is ideal for a road trip, drivers need to be wary of long distance trips.
Adding more miles comes at the cost of a steep penalty when the lease is up.
Know All the Facts
The advantages of leasing a car are many. For some, it’s a cheaper option to drive a new car for a short period of time.
For others, it’s simply not the right decision.
Be sure to know all the facts before diving into a lease, including both what the driver needs from the car and what the dealer expects from the lessee.
And remember the all important rule: always read and understand the full lease agreement to learn about any and all limits, charges, and fees before driving off the lot!