Do you ever wonder if leasing is right for you? Below are four reasons you may be a good candidate. This is part 2 in a three part series on leasing. Click here to get up to speed from part 1.
You always trade every 2 or three years
I have worked with many customers over the years that trade every two or three years. Market values for vehicles rise and fall over time. Sometimes you can buy a new car and experience very little depreciation, other times the depreciation can be substantial. For example, right now a new Fusion costs around $26,000. A three year old trade with 30,000 is only doing about $12,000 at auction. When accounting for some sales tax and interest trading that vehicle will cost you about $16,000 over three years. The same vehicle on a lease will be around $300 per month payment (includes taxes). Total lease cost in that case will be $10,800. As you can see, in the case of the Fusion a lease is $5200 cheaper than a buy if you want to trade in three years.
Your life and driving situation is stable
Leasing is a great option for people with a stable life situation. Maybe you have a good stable job with a regular income and you want your vehicle expense to be fixed. You are a person of habit. You don’t take long unexpected trips and you don’t loan your at to people who do. If this is you, leasing may be a good idea. You won’t have to worry about unexpected repairs, or fees. You simply stay in your routine and getting a new vehicle on a regular basis becomes part of that routine.
You are owe more on your current vehicle than it is worth
I have successfully leased many new vehicles to people as a way of getting them out of a negative equity situation with their trade. The leasing companies are primarily concerned with the payment and that a persons income supports that payment. When you finance a vehicle they also take into account the loan-to-value, and when you have negative equity on a trade the high loan-to-value will often disqualify you for a loan. Take this example of a 2017 Ford Focus:
|Lease (36 months)||Buy (72 months)|
|Base Monthly Payment||$244||$325|
|Plus amt. owed on trade ($3600)||$100||$50|
|Total Monthly Payment||$344||$375|
In this case the bank may not take the buy option because they will only accept a loan-to-value of 110% or less and the monthly payment on the lease is lower anyhow. If this customer chooses to lease, they would have a lower monthly payment, and at the end of the lease they would be at $0 rather than negative $3600. In this example leasing is clearly they way to go.
You want to try out a new type or brand of vehicle
Finally, leasing is a great option if you want to try out a new brand, or a new technology without committing to owning the vehicle for a long time. Recently Ford came out with a 10 speed automatic transmission. Customers are often concerned about the longevity of an untested new product. I will sometimes suggest a lease to them. That way they can test out the new transmission for 2 or 3 years and then commit to longer term ownership once the technology has been proven.
If any one of these situations apply to you, you should stop over and ask about leasing. We will be happy to sit with you and help you decide if leasing is right for you. And don’t worry about being pressured into purchasing a vehicle. You can always to home and sleep on it, with our “Sleep on it Guarantee”! Stay tuned next week for part three of our leasing series.
This article is published by Dovi Motors Inc. dovimotors.com. Please feel free to share this content as long as you link back to this site. Thanks.