Leasing a vehicle has been a popular option in the UK for some time with about 30% of consumers entering into a lease agreement instead of purchasing a new vehicle. Leasing instead of purchasing isn’t for everyone, but many people are finding it is a better and less expensive option. If you tend to only keep a car for 2-3 years once you factor in the depreciation of the vehicle and the interest paid, the cost of a leased vehicle is often a lower cost option. For many the contracts involved with a leased vehicle also provide for simpler transactions with less risk.
When you go to turn in the vehicle all of the details are already worked out so there is no haggling with the dealership about how much value the vehicle has. This reduces the risk of getting a bad deal on the trade in, including a lower trade in value because of re-calls, bad press for the vehicle maker, or other market changes that can affect the value of cars on the used vehicle market. If you do fall in love with the car and don’t want to return it there is usually a buyout option which is spelled out in the initial contract so you will know exactly the cost to keep the car. If you love the vehicle, but the buyout price is higher than the market price for the vehicle used, you can always buy the same make and model on the open market instead of using the buyout option.
One of the biggest concerns when owning a car is the cost of repairs. Using a lease option that provides you with a new car every 2 to 3 years, your car’s repairs will almost always be covered under the warranty which can take away much of the stress of owning a car. Additionally every year manufactures are making improvements to fuel efficiency and safety technology, you will always be able to have the best advancements the market has to offer and you won’t find yourself penalized when you trade in a make and model that has had significant advances in the newest model.
Another benefit of leasing is you can often afford to lease vehicles that you might not be able to purchase. For example cars like Mercedes Benz and Volvo might be out of your price range for purchase, but because they have a lower depreciation rate than other vehicles, the cost to lease them might be the same as a less luxurious and less safe model is to buy. This allows you more flexibility when evaluating which makes and models fit your budget, your safety priorities, and your lifestyle.
When it comes to credit, there is good news with a lease; you can still use your good score to negotiate for better terms on your lease, including a lower down payment. If your credit is less than perfect or you have had some credit issues, you will find that you are more likely to be approved for a lease than for traditional purchase financing. In some situations you might also find that the cost for insurance is cheaper especially if you purchase your insurance with the lease and the vehicle has black box technology that can track the vehicle. This can be especially attractive for younger drivers who tend to have higher premium rates.
If a new car really is out of your budget and you don’t want to purchase an unreliable clunker, you can also take a look at the many certified previously owned/leased vehicle programs that allows you to lease a newer model used car. Bundled in with your lease of a used vehicle you will usually have an extended warranty so you get the advantages of a new car lease program at a lower cost while still maintaining most of the benefits, including having most major repair costs covered.
The one thing you might wonder is if Leasing is such a good deal, why does it have a bad reputation. Just as with any deal on a vehicle you need to read the fine print and make sure you understand all of the conditions of the lease. Many people have faced large costs when they return a leased vehicle due to penalties for going over on mileage or because of excessive wear and tear. Just like anything in the contract the number of miles you can use during your lease is negotiable. It may come with a higher lease payment, but if you know you need a higher millage allowance talk to your dealer about your options. If you are concerned about getting charged for dings in the vehicle at the end of lease ask your dealer about insurance options that will cover any unusual wear or tear.
Just as with any other major purchase in your life, the better educated you are about the options open to you, the better deal you tend to get. So before you go to your dealer, look at what options the different automakers are offering for leases and know what you want to negotiate for with the dealer when you are selecting a new car.
* All vehicle images and car descriptions on this site are for illustration and reference purposes only and are not necessarily an accurate representation of the vehicle on offer.
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