We are firm believers that leasing is an option for almost everyone. The problem is, if you don’t work at the car dealership, and completely understand what it means to lease, it can be really confusing.
Today we’ll debunk the most common statements we hear every single day. We believe more than every one in five customers should lease. Leasing should be an option if you’re considering financing a vehicle for 60 or 72 months.
Myth #1: Leasing is just renting a car.
Leasing is not just renting. When you lease a vehicle, you are paying for the depreciation of the use of the vehicle up front. And the option exists to purchase the vehicle anytime during your lease.
So really, you can lease it for a couple of years, pay off the depreciation (instead of the interest that’s mostly paid upfront on a loan), and then choose to buy the lease out or turn it back into the dealership.
And guess what else? When you are financing a vehicle, the bank owns that vehicle. Not you. Not until it’s paid off. The average person paying for a 60 or 72 month loan only keeps their vehicle 52 months. Hopefully your car is worth more than you owe when you it’s time to trade it in for a new one.
Myth #2: You can’t get a good deal when you lease.
Leasing is oftentimes less expensive than a purchase. Let’s take a look at some real numbers, as of today, at our dealership.
If you were to lease a 2014 Chevy Cruze 1LT for 36 months, the lease payment would be $192 per month with $2,000 down. That equals a total investment $8,912. Now, if you were to buy that same 2014 Chevy Cruze 1LT, financing it for 60 months at 3.9% interest, your payment would be $332 per month, with $2,000 down. The average buyer does not keep their vehicle until the loan is paid off. So if you were to trade in this purchase after three years, you would have paid $11,894 out of pocket. The problem is, most of that payment went towards interest. So you paid $3,072 more, and ended up getting rid of the vehicle anyway.
Let’s look at a Camry. If you were to lease a 2014 Camry with $1,820 down, you would pay $228 a month. That is a total investment of $10,028 over 36 months. If you were to purchase that same 2014 Camry, with $2,200 down for 60 months, your payment would be $373 a month. If your needs change, and you have to trade that vehicle after three years, you spent $605 more with the purchase.
We know what you’re thinking. I have equity in that vehicle I was purchasing. Yes, but not as much as you think. Due to the fact that first half of an amortization schedule is paying off interest in your monthly payment. Many times in these situations, customers are shocked to find that they upside down on their trade values.
Myth #3: You can’t get out early.
We get countless numbers of customers out of their leases early (well, we actually can count them – the average leasing customer gets out about 6 months early because THEY CAN).
Are you driving way too many miles, and you don’t want to pay a milage penalty at the end? Do you suddenly need a four-wheel drive vehicle or something more fuel efficient? That’s okay! Life situations change, and there is no better way to face those changes than in a lease.
Bring the car in now, and let’s get you into something else. We buy the lease out for you if you don’t want to buy it out at the end. Easy-peasy!
Myth #4: Leasing is only for businesses.
Originally, leases were intended for businesses, but auto finance companies soon expanded their programs to offer leases to regular consumers. And while it’s true that 75 percent of luxury cars are leased rather than bought, 20 percent of all new cars, trucks, SUVs, and vans are leased.
Businesses aren’t the only ones who receive tax breaks on leases. You, as an individual, receive tax breaks as well. When you purchase a vehicle, you pay taxes on the entire cost of that car. When you lease a vehicle, you pay leasing taxes (they vary from state to state), which can be much less.
Myth #5: You have to pay huge fees when you turn in the car.
If you stay brand loyal, for example, if you go from a Toyota to another Toyota, you don’t pay any lease turn in fees (the manufactures want to keep you). If you don’t stay brand loyal, you’ll have to pay about a month’s payment (or less) when you lease through the manufacturers bank. Typically sticking with the manufacturers bank when leasing is more advantageous than leasing through your own bank when it comes to turn in fees.
Now, if you go over on your milage, you could see some fees. About 20-25 cents per mile (based on the brand). But have no fear! We can just buy that vehicle outright at the dealership. So bring it in when you realize you’re going to be over your miles.
Myth #6: I drive too many miles.
When you sign up for your lease ,people typically opt for 10,000, 12,000, 15,000 miles per year. But did you know you can tailor those miles to your needs? You can! We’ve seen people lease for 25,000 and even 30,000 miles per year.
Keep in mind, regardless of whether you lease or buy, driving a lot of miles automatically lowers the value of your vehicle. And again, just bring it into us, and oftentimes we can get you out of that lease early and into something else.
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