If you are amongst those who wish to change their cars after every few years, then leasing one makes abundant economic sense.
When you lease a car, you do not own it. While leasing, you have to sign an agreement that includes details about monthly payments and lease duration. The lease amount is usually calculated to cover only the estimated amount of depreciation in the given duration, plus the interest. So, unlike buying a car, you just pay for what you use and not the entire selling price of the vehicle.
One of the prime benefits is the satisfaction of driving a new car every 2-3 years. If you own a car, it will age in 2-3 years. This is not the case with a leased car, where you can opt for a change, after the lease period is over. Also, if you have a business and you use the vehicle purely for business purposes, leasing is a great option.
The leasing cost is lesser than what buying a new one would incur. You usually have to pay an amount equal to three monthly payments, 'upfront'. This amount is lower than the down payment made when buying a car.
Sometimes, you don't even need to pay this amount. You just need to pay the monthly installments. They will be lesser than the monthly installment of a car loan. Some of the leasing companies also give you the option to 'trade in' your old vehicle and lower the monthly payments.
You are supposed to mention the expected annual mileage. Higher the mileage you demand, more is the amount you need to pay as monthly installments. Remember, if you exceed the mileage, you have to pay penalty charges.
There is a tax advantage too. You don't have to pay sales tax on the entire value of the leased vehicle, as you would, if you purchased it. You are supposed to pay the tax only on the portion of the value that you use during the lease period. The tax is usually included in the monthly payment of the lease.
Most of the time, you will return the leased car to the company, before the manufacturer's warranty expires. This means that some of the expensive repairs of the car, such as installing a new transmission, etc. are not considered. This is the reason why most people opt to lease a vehicle for a term, which coincides with the duration of the warranty coverage provided by the manufacturer. So if some problems arise in the car, the repairs will be covered.
Moreover, you don't have to face the problem of selling this used car. If you own a car, there's always a headache that you have to go through, which is the reselling. But in case of a lease, you have to return the car to the dealer, at the end of lease period. Moreover, some dealers also give you the option of buying this leased car, after the lease period is over. So if you have really gotten attached, you can think about this alternative too.
Well, if you have decided to lease a car, remember that it's the dealer's car, and hence, maintaining it properly is essential. If you fail to keep it in good condition, you will have to pay for the damages. Also, if you are not sure that you will be able to keep the vehicle for an entire term of the lease, then better opt for buying a car. Early termination of a lease contract is expensive and your credit might be ruined. Make sure that the financial calculations are in your favor, before making a decision to lease.