Looking out for a car to drive to your workplace then are you thinking of buying or leasing one. Make sure you get the best deal, before doing anything. On the other hand, interested car owners always think about getting a best price for their vehicle. That’s the reason the car owners check out how much does it cost to lease a car. Most of the individuals do not figure out the difference between leasing a car or buying it altogether. Without further thought, you might go in for a car loan with an application. But, before getting into the mode of down payment and monthly installments let us discuss leasing a car.
How Much Does It Cost To Lease A Car?
Before knowing about leasing a car, let us know why buying a car is not a good idea. Basically, car is depreciating that means to say its value get reduced with time. The more you are using the car, the more it is depreciating. Especially if you are buying on installment basis by the time you complete the term the value of the car gets deprecated and there will be little equity left behind. All the money you have invested all these months do not show off as your car at this point of time will not be worth it.
So, thinking this way you are investing in something that is losing its value and going down. Moreover, in the long term it will cost you more. Most of them also have plans for upgrading their cars and if you are one among them then leasing will be a better option than buying.
On the other hand, if you are leasing out a car you are paying for the service at that instant. Though you may end up paying more on a monthly basis, you are not investing in something that is losing its value. Moreover, there are some car dealers who can lease you a car without any down payment.
At the first instant, people may not be aware of what is leasing a car and its benefits. It also may be attributed to the higher monthly fees for leasing in comparison to the monthly installments. This prevents people from leasing a car and prefers buying one.
What Is Leasing A Car?
Leasing a car means paying a monthly fee based on the vehicle depreciation to the lessor by the lessee to enjoy the service of the vehicle for a prefixed period. Customers happy with leasing is a benefit for them rather being an obstacle. Mileage limitations are imposed on the leased vehicles. It is about 12,000 to 15,000 miles a year. In case of exceeding total miles, a penalty will be levied on you at the time of giving back your vehicle. Usually, the penalty will be assessed at 25 cents for each exceeded mile. But, there is an option for you to buy extra miles well in advance in case if you doubt you need it. And these are available in discounted rates.
If you are a tough user, then buying probably will be a better go because leasing vehicles should be returned in a superb condition. Torn upholstery, dents, scratches, cracks in the window are not acceptable and with all accessories in good working condition. If you fail to keep up the standards then, excessive wear and tear fees will be thrown upon you.
Remember once you enter an agreement on leasing a car it is difficult to terminate in between. Moreover, it is expensive. If your financial future is uncertain then leasing out, a car may not be a better option for you. And if you simply want to change the vehicle once after getting the agreement you will have to bear hefty termination fee. Usually, the termination fee is on the high end because to prevent people from breaking the agreement.
Let us compare to see how much does it cost to lease a car or to buy. Take an example of Honda Pilot EX AWD 2006 model. If you are buying the car with a 36-month loan at the rate of 6.75 how much it costs then what it costs to lease the same for 36 months. The lease specifics are on the basis of the Honda-underwritten contract of the month July 2006.
Down payment for purchasing a car will cost around $6,719 that is 20 percent of the purchase price. On the other hand, if you are leasing the down payment will be relatively less and may cost you around $2,000 or in some cases there is no down payment. Make a note of it that the lease amount here includes payment of the first month.
The monthly installment will cost you $825 whereas leasing cost you $359. Now you love the leasing figures, and you like to lease one. Payment made in parts definitely has advantages. Remember here we are comparing 36-month term for purchasing and leasing. However, there are few dealers offering longer duration may be 48 or 60 months. This reduces your monthly payments. Comparison for a long term is difficult and long duration is rarely available.
By the end of 36 months, the total payment figure for purchase will be $36,419 and in case of lease it is $14,565. To keep your money in your wallet as well enjoys the service, and then you can opt for leasing. Buyer ends up paying two and half times more money as the lessee.
There is nothing remaining, as residual value for a lessee. The buyer even after paying high monthly installments will have $23,701 in his account. Of course, this amount can be used as a down payment for the new vehicle.
The lease saves your money instantly, and you can notice that up-front. However, if you take into account, the value of vehicle purchaser will end up with $2,000 more. Before leasing a car, make sure you are aware of all the terms and conditions in the agreement. Be careful before entering into one. However, before getting into leasing or buying make a decision on which brand you prefer and the value of it for buying and leasing out.