Making a choice between buying a car and leasing one is always tough. There are a few upsides to leasing from a viewpoint financial. For example, you might want a luxury car but cannot afford to buy it, but leasing one is possible. So, here’s how you can make the most of a car lease and why it can be a better option over buying one.
The costs of leasing a car are significantly lower than those of maintaining a vehicle you own. You save more money with lower monthly payments, out of pocket expenses, and enjoy certain tax benefits on the lease. Even a monthly cost of leasing a car that you would normally not buy can be up to 60% lower than the installment due for that vehicle. This way, you get to drive your favorite car and not worry about shelling out the big bucks. With a lease, you also avoid paying for standard repairs and maintenance as these costs are included in the manufacturer’s warranty. Moreover, many states allow you to write off the cost of the lease and save a few hundred dollars.
Another simple way to make the most of a car lease is to arrange for a one-pay lease. But it may sound confusing to lease a vehicle and still pay the total cost upfront. You can save the entire interest amount by doing so. Car dealers in many states may voluntarily forgo the interest component of the lease if you pay them upfront. For example, if the cost of leasing a vehicle is around $500/month (including around $50 in interest), the total lease value for a period of three years would be approximately $18,000. With a one pay lease option, you can avoid paying the $1800 interest and effectively pay only about $16,200 for the lease. You can qualify for a single-pay lease even if you cannot secure a regular one owing to lower credit.
Choice of Vehicles
With a lease, you have the liberty of owning and driving a variety of vehicles. Instead of driving a regular-sized compact, you can upgrade to a better spacious sedan. This how you can make the most of a car lease, by paying for a compact but owning a sedan. You can drive the car for a couple of years and switch or upgrade to a better trim variant. Moreover with a lease, the upfront cost is less in comparison to what you would pay for buying a car. This way, even if you keep switching vehicles, the out-of-pocket expenses for every new lease will be lower than buying one.