If you’re in the market for a new car, there’s another big question to answer other than simply what type of vehicle you are looking for – is it better to own or lease? The better answer to that question depends on who you ask, as both offer unique benefits.
Some drivers consider owning a vehicle to be the only option, as the prospect of eventually paying off their car loan and owning the vehicle outright is intriguing. However, since cars aren’t like homes, and most lose value quickly during the period of ownership, leasing can also be an enticing option for those who enjoy driving the newest model.
During the average term of a lease (three years in many cases), the cost of leasing a newer vehicle can be pretty comparable to the cost of ownership during the same period. Leasing can be a good option for those looking for less commitment and the simplicity of signing another lease for a newer car once the lease expires.
Since terms of leases vary across the board, many people who haven’t leased a vehicle aren’t sure how it works. Here are a few things to keep in mind if you are considering leasing a vehicle:
* Your negotiating power when leasing a car is just as powerful as when buying, so after choosing the vehicle you like, ask around about different lease options. For example, if you decide that you want to lease a Nissan Maxima, contact each local Nissan dealer and ask for a quote containing the terms of the lease for that vehicle. You can then compare quotes, and when you get the deal you like, ask the other dealers if they can beat the best offer.
* Not all lease terms are created equal. Be sure to ask your salesperson to clearly state the terms of each lease so you can fairly compare them with one another. Make sure you clearly understand the terms of any warranty offered or required maintenance schedule, so you can avoid any unexpected costs down the line. The car experts at Edmunds.com recommend a three-year lease because maintenance issues are more likely to appear once a car is older than three years.
* Pay special attention to mileage limits on any lease. Most standard leases carry a 12,000 mile-per-year limit, so if you know you’ll be driving more than that, you’ll want to negotiate a better mileage rate than the standard rate charge once you exceed your limit. If you’re unsure of how much you drive, measure over a one-month or three-month period of your usual driving load and multiply to get an estimate for a year.
* Discuss insurance options with both your dealer and insurance agent and factor these costs into your car budget. Whether you’re buying or leasing a car, it’s a good idea to check on whether you might need gap insurance, which ensures that you’re not on the hook for more money that your insurance company would give you if your car were totaled.
Leasing can be a great option for individuals who want to drive a newer car and are looking for cost-certainty from month to month. By examining the benefits of buying versus the benefits of leasing a vehicle, you can determine the option that’s best for you.