We all know at least one person who considers leasing a car to be wasteful. However, if you actually work the numbers and do your research, you would find out that leasing a car might just be the smarter option to drive a new vehicle.
This advice is not just for people with day jobs. Leasing can be a great option even if you are a car enthusiast.
It can be a bit difficult for one to make the decision between leasing and buying their car. Some people argue that buying a new car doesn’t make sense because it hits you with a massive depreciation. However, wouldn’t it be nice if you could drive the car you like and only pay for the depreciation amount?
Basically, leasing a car involves paying the difference between the sale price and the residual value. Of course, you are required to give the car back by the end of your term, but it only is a problem if you are actually interested in the ownership. Many people just want to drive the car they like while paying for the expenses, within their monthly budget.
Why would anyone make payments on Toyota Camry when they could drive BMW 3-series for less?
If a brand new 2015 Camry XSE was for $33,500, with $4000 down payment, at 3% for 60 months, would cost you about $530 per month. On the other hand, a nicely equipped BMW 328 costing $41,500, with down payment of $4,000 for 39 months would cost $359 per month. Just for this example, let’s assume you can afford $530 per month to lease the 3-series; you could be pocketing a savings of $6,660 over the period of 39 months. You could use these savings to make down payment to your next vehicle.
This means that even with the same down payment, trying to get a lease on the new BMW will make comparatively a smaller dent in your monthly budget than owning the Camry.
Most people would prefer not to make both car payments and repair and maintenance payments at the same time. When a leasing a car, your vehicle is under the factory warranty coverage, which allows you not to worry about the repair budgeting. Some services will even cover small things like oil changes and brakes for initial years, which make fuel the only added cost.
With more people turning to 72 and 84 months loans, don’t realize the risk of additional expenses that arise when issues come up. Many of these people may have to then take out extended loan terms, which would have been better off with leasing one or even more brand new cars during the same period of time.
If you are one of those fancy entrepreneurs or if you own your own business, you might be able to turn a portion or all of your lease payment as a tax deduction. Even though it largely depends on the nature of your work and the type of vehicle you decide to lease, but it is highly recommended to consult a tax accountant expert who can guide you the best.
Moreover, some organizations offer vehicle stipend to their employees. As long as someone else is paying for it, lease the nicest car for yourself.
Millions of people around the world live in rented apartments and condos, without feeling the need for ownership. It might not make sense to some people from a financial perspective. However, many people want to live in a specific area where they can’t make the purchase, for any number of reasons. Leasing is the same, it might not be an option for everyone, but if you want to drive a car that is not supported by your budget, yet you can meet the requirements of the lease, go for it.