Advantages of leasing a car

You have that latest generation car in your sights: the color you always wanted, the model, the brand, with the most innovative accessories on the market. But, paying in cash would be a very heavy drain on your bank account.

How would you like to lease it instead of buying it? Do you know the benefits of leasing a car? Would you like to renew your vehicle every two or three years?

When buying a car with cash you have benefits, although it is not the best option because you have to pay the total price at once. There’s also no tax advantage.

But acquiring a vehicle by paying for it with cash is the ideal option for those who like the idea of owning a car, if they plan to keep it for several years, or if they want to alter the appearance of it.

The advantages of leasing

According to specialists in car leasing, a leasing agreement (with the right to purchase) is an agreement in which the lessor allows the lessee to drive the car in exchange for monthly payments over a specified rental term. When the term finishes, the lessee can choose to buy the car by paying a certain price, return the car to the dealer, or renew the contract.

The cost of the vehicle is divided into small monthly installments for two, three, or four years. VAT and interest are deducted in each monthly payment throughout the contract. With contract hire and leasing, at the end of the term, the lessee has the option of returning the vehicle to the lessor or buying it, paying a residual value that is usually already established in the contract.

Tips when leasing

• Look for offers and compare; there are different types of leasing for specific situations.
• Read all the details of the contract, identify the expenses that correspond to you.
• Take out insurance on your own, as it is generally cheaper.
• Look for cars that maintain their value over time.
• If you are thinking of purchasing the vehicle, ask about the amount to be covered at the end of the contract.
• Remember that if you decide to buy the car at the end of the lease, it may be more expensive than financing it from the beginning.

Characteristics

• The monthly payments are applied to the rental of the car, which can be acquired at the end of the term by paying the residual value.
• A down payment of 15%-20% of the value of the car is normal.
• The monthly payments are lower than for a car loan because they only represent the depreciation that the vehicle suffers during the term of the contract and not the total cost of the car.
• Terms from 12 to 48 months.
• Maintenance is mandatory and the lessee must keep the car in good condition.

Final thoughts

You should lease if you…

• feel the need to have a new car every two to three years.
• care more about driving a new car than owning it.
• are willing to make monthly payments for rent and not for the value of the vehicle.