The experience of purchasing a new vehicle can be exciting, confusing, or worrying – you may feel these emotions all at once. It’s a lengthy commitment signing on the dotted line; you’re financially planning for a 48, 60, or even 72-month loan… it can be daunting. On the other hand, purchasing a new vehicle means that fresh “new-car smell” and leaving the lot in your shiny new wheels. It’s exciting! Maybe you’re purchasing for reliability or maybe you’re just due for an upgrade. Regardless, at the end of the day, you’re searching for a new ride. However, you must remember that settling into a 4/5/6 year loan isn’t your only option. Vehicle leasing has soared in recent years. Buyers are finding the idea of a short-term lease extremely beneficial.
“The average lease payment in February, based on a 36-month term with 10% down, was $425—virtually unchanged compared with February 2012, according to J.D. Power. The average car payment, based on a 72-month loan with 20% down, was $542, up $100 – or 23% – from four years ago.”
Essentially, you’re renting a new car with a less-expensive monthly payment than purchasing outright. You will never own the vehicle. When the lease ends, you return the vehicle back to the dealership, and that’s the end. Meaning, you have nothing of value to “trade in,” but you’ve gained the freedom to continue to lease, purchase a vehicle, or weigh your options for however long you desire.
It’s a unique experience being able to lease a vehicle without the worry of trading it in, keeping it, or selling it back at the end of the loan, compared to the conventional process. Now you’re open to explore different leasing options and agreements. Choosing to lease could keep your monthly payment lower, and you’re not locked into this vehicle for many years. You don’t have to worry about the depreciation of the vehicle, as you won’t be selling back or trading in – that’s not your concern once your lease has ended. Although, similar to purchasing a car, you’re still responsible for the upkeep, maintenance, and dings that may occur to your vehicle while leasing.
On the other hand, there’s an influx of leased vehicles making their way back to the dealerships, which creates an overflow of inventory. Supply and demand suggests that we will see the price of new, used, and even certified pre-owned cars drop slightly to accommodate the excess of vehicles. This is great news if you’re seeking to purchase a vehicle rather than lease, because if you time it correctly, you’ll have the upper hand in the negotiating process.
If you’re interested in reading about how the rise of leasing has impacted dealerships and the auto industry, please check out this article from The Wall Street Journal’s website.