Leasing a car–while appealing because of the lower monthly payments–can be tricky. The reason is that you may pay substantially more for the privilege of leasing than you would if you were to purchase the same vehicle using an installment loan (e.g., with an interest rate) or paying cash.
When you lease a vehicle, the leasing company essentially becomes your creditor, and they’re usually happy to let you borrow money for as long as possible, even if it means stretching out the term over several years.
Your monthly payments will include not only a “lease charge” but also payments on any loan balances that roll from the end of your lease term into future installments. If you do not have a loan balance, your lease may be labeled as “closed-end” and the monthly payments will be lower, but you’re still in essence borrowing money.
This is why, if you plan to lease a luxury car for $600 per month over three years, you may pay $4,800 more than if you were to purchase the same car for cash. That’s right–paying cash can save thousands over the life of a car.
You must also be aware that leases are very strict as to who can drive the car and where it is allowed to travel. In the lease contract there usually is a section that will tell you where and when you can drive your car. Many luxury cars are leased for two to three years, with the first year requiring you to drive it no more than 12,000 miles. Some leases don’t allow you to drive the car during certain months of the year. You must also return the car in perfect condition or it will be billed against the value of the vehicle when you turn it in.
If you plan to make a trade-in toward your next car at the end of your lease, this is where you could lose a lot of money. You may want to think hard about leasing and instead purchase a great used luxury car from us instead of leasing.
If you’re looking for a great luxury car value, then call us today at (607) 754-9118. We have the best selection of pre-owned luxury vehicles under $15,000 in the area. Visit us today at 209 Vestal Parkway West in Vestal, NY.
