Leasing: Another Great Alternative for Automotive Finance!

Are you tired of your current car? If you’re in the market for another vehicle but want an alternative to owning your next car, leasing could be the answer to your problem! However, before you decide on a strategy to finance your next car, it’s important to know what leasing is and is not.

How Does Leasing a Vehicle Work?

Leasing a vehicle becomes more and more popular among auto consumers with each passing year. And it’s easy to see why! Leasing a vehicle is generally more affordable than buying a car, new or used, outright. But although consumer auto leasing has been around for nearly two decades, many consumers still don’t fully understand what auto leasing actually entails.

Auto leasing does not mean rent to own. When you agree to lease a vehicle you enter into a contract, usually with your auto dealership, in which you agree to use the vehicle for a limited amount of time at a monthly cost. The amount of time you can use the vehicle is determined by the life of your lease. Once your lease expires, you must return the vehicle to the dealership. At this time, most lease agreements will offer you the option of buying the vehicle outright from the dealership or returning it to the dealer.

The Benefits of Auto Leasing

People new to leasing may wonder why anyone would want to make monthly payments on a vehicle that they will have to return at the end of the lease. That’s a fair question. And the easy answer is big savings! When financing your car, the monthly payment on a leased vehicle will generally be significantly lower than monthly payments on a car loan for the same vehicle.

This means more money in your pocket at the end of the month. It also opens up the possibility of leasing a car model that would otherwise be out of your price range if you chose to finance it through a traditional auto loan package. Another benefit of leasing is that you don’t need to worry about the long term value of the car. Because you return your car to the dealership upon termination of your auto lease agreement, your dealer assumes the risk of the future market value of the car.

The Costs of Auto Leasing

However, it’s important to take into consideration the terms of any leasing agreement you enter into. For example, most leases will impose a mileage limit on your vehicle, such as 12,000—15,000 miles per year. Additionally, depending on how rough you tend to be on your vehicles, you may be charged extra at the end of your lease in order to cover excessive “wear” fees. And nearly all lease agreements include an early termination fee if you choose to end your lease before it expires. Leasing a car has its benefits, but is not for everyone.