Most people assume they’ll have to save for years or take out a costly loan in order to afford purchasing a new vehicle. Fortunately, there is another option. Previously reserved for corporate customers and luxury car buyers, today, anyone can choose to lease their new car, truck or SUV. Leasing might be the perfect way for some consumers to drive off the lot with a new vehicle. However, like other financing options, it does have pros and cons.
What Does it Mean to Lease a Car?
Leasing a vehicle is essentially renting the car of your choice for an agreed upon period of time. After signing a contract with the dealership, you are required to pay a monthly fee. This payment is usually less than the cost of paying back a loan or paying off a direct purchase. You’re only required to make payments for the term of your contract, while the vehicle is in your name. After the contract expires you return the vehicle to the dealership and either sign another lease contract for the same car, sign a lease for a different vehicle or simply walk away.
Benefits
Unlike directly purchasing a vehicle, signing a lease contract usually doesn’t require a down payment. If you are required to pay something up front, the amount is comparatively small. One of the biggest draws to the leasing option is the ability to drive a higher-priced, more advanced vehicle you might not otherwise be able to afford. Leasing gives you the ability to enjoy a late, and sometimes even luxury, model for a fraction of the cost it would be to purchase the same vehicle outright. Most new vehicles are also still covered by a manufacturer’s warranty.
Drawbacks
While lease payments are often lower than the monthly charges you’d pay after directly purchasing a vehicle, they’re not always cheaper than an equivalent loan. Monthly lease payments can vary from person to person depending on credit score and financial history. Higher finance charges could place you in a situation where applying for a loan might actually save you money.
Leasing contracts often limit what you can and can’t do with your vehicle. No after-market changes can be made in any form and you’re required to keep the car in good or better condition. Any damage to the exterior or interior could result in additional charges. Some contracts even include a maximum mileage limit. If you drive more than a set distance in a year you’re required to pay anywhere from 10 to 25 cents per additional mile. Your leased vehicle needs to be returned to the dealership in almost the exact condition you purchased it, which is not feasible for some buyers.
Competitive Financing Options in Seattle
Toyota of Seattle understands that every customer has a unique budget and needs. Our finance department is focused on ensuring your experience exceeds all expectations. Contact us today to speak with a financial manager and discuss your options!