The biggest thing leasing has going for it is the ability it gives you to drive more car for less money. When you lease, the monthly payment you make is based primarily on the amount of depreciation the car will experience during the contracted period, so it is much less.
However, all you’ll have is the memory of the car when the lease is over. This is why many financial experts argue in favor of buying instead of leasing. Still, there are times when leasing a car makes more sense.
Let’s examine some of them.
You Have Business Needs
The IRS allows you to deduct both the depreciation and financing costs that are part of each monthly payment when a car is used to conduct business. If you’re in Real Estate or another business in which you have to drive clients, you can have a nice car in which to transport them and pay less for it.
Most financial people agree it’s a bad idea to finance a depreciating asset, as you’ll lose money over time. Leasing staves this off nicely. Further, you can get into the car with a smaller outlay and you’ll pay less each month to operate it. This frees up capital for marketing and other investments in your business.
Your Situation Leaves You Little Choice
There are times when you might find yourself in a situation in which you’ll need a car — to get to work or school for example — but you just don’t have the cash flow to buy a car outright. Leasing’s lower cost of entry and lower monthly payments could be just the solution you need.
A Deal Is Too Good to Pass Up
You’ll often encounter remarkably generous deals to lease or buy a car at the end of a model year. In some cases, you’ll see better deals on leases than outright purchases — particularly in the luxury category. This can be good for you because you’ll drive a nice car for much less money. It’s good for dealers because they’ll get a lightly used car back to resell.
You Don’t Want To Be Bothered
Owning a car brings with it a lot of responsibilities as the car begins to age. You’ll pay to replace normal wear and tear items, as well as be subjected to periodic failures. Granted, these can often cost less than you’d pay if you keep making lease payments over and over again.
However, there is the strain on your nerves to consider as well. A leased car, if contracted carefully, will always be under warranty. It gets fixed at the dealer who will 2 often give you a loaner car as well if it breaks down. What’s more, many manufacturers include basic maintenance like oil changes and the like in the price of the car, so you’re freed of those concerns as well.
You Like Driving New Cars And Money Doesn’t Matter
Leasing is the least costly way to drive a new car every two or three years. Yes, you’ll be making payments every month and you’ll have to come up with a down payment each time you trade out. However, the other side of it is you’ll always have the most current styling, the latest technology and the peace of mind that comes with knowing any car problems will be the manufacturer’s rather than yours.
The Bottom Line
Yes, you will usually come out ahead financing a car over 60 months or less and keeping it for many years after it’s paid off. There’s no arguing against this fact. However, as you've seen above, there are instances when leasing a car makes more sense.