![\"Hyundai](\"http:\/\/blogs.rosenhyundai.com\/wp-content\/uploads\/2016\/09\/leasebuy.jpg\")
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Why 40% of Rosen customers lease.<\/p>\n
Is leasing or buying the best way to finance your next car? There\u2019s no one simple answer to this debate, except \u201cit depends.\u201d<\/p>\n
In this Q&A, Scott Levy, owner of Rosen Hyundai, identifies the ideal customer for leasing, and why it might work for some people and not others.<\/p>\n
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Rosen:<\/strong> Plain and simple: leasing gives you options.<\/p>\n <\/p>\n No one knows what their financial life will look like in three years. In three years one can lose a job, gain a promotion, be swallowed up by medical costs, experience a costly catastrophe, or inherit wealth. Leasing a car gives you flexibility to downgrade or upgrade given your ever-changing financial situation.<\/p>\n When your lease is up, you can upgrade, downgrade, re-lease a car, buy the car, or trade it in. Whereas when you buy a car, you only have one option\u2014and that’s to trade it in.<\/p>\n <\/p>\n It\u2019s a common concern. But remember, when you finance a car, you don’t really own the car. The bank owns the car. When you lease, you don’t own the car either. The leasing company owns the car. It’s a similar situation, except at the end of a lease you have more options. With leasing you are only obligated for the term of the lease, which is typically three years. With buying, the loan is typically dragged out over five or six years of financing.<\/p>\n \u00a0<\/strong><\/p>\n With all these options, you can work out the lease to give you more car for less payment (and that’s usually how it works out).<\/p>\n Take this example with a vehicle that has a $20,000 MSRP. If you purchase it, you are financing the entire amount, and your monthly payment will probably be around $300. If you lease it, the payment is based on the lease percentage of the residual value, so your monthly payment will probably be around $200.<\/p>\n Of course, this depends on financing rates. But typically, you are going to be able to drive a more expensive car for less money.<\/p>\n If you are someone who wants to get a new car every three to four years\u2014and can\u2019t pay for a new car in full\u2014leasing is a great option.\u00a0 You\u2019ll still have a car payment, but at least it will be for a brand new car.\u00a0 Many professionals who interface with clients opt for leasing because it allows them to buy a luxury vehicle for less money. Some people simply love driving new cars, enjoying the latest bells and whistles. Leasing allows them to upgrade more frequently.<\/p>\n <\/p>\n One big reason is your car is almost always under warranty, so the cost of ownership drops drastically. With Hyundai, you are under warranty for the entire time of the lease. General service maintenance (think oil changes and tire rotations) is really the only thing you have to pay for. Everything else is covered.<\/p>\n Leasing benefits your credit as well. Your monthly payment is the only thing that will show up on your credit report. As long as you are making those payments, and you’re making them on time, leasing helps your credit score.<\/p>\n Also, with leasing, a smaller down payment is required. Typically, customers don\u2019t have to come up with any cash beyond the first month\u2019s payment. You can even get money back on a lease if you are trading in a vehicle.<\/p>\n <\/p>\n Most leases allow for 12,000 to 15,000 miles per a year. However, if you drive a lot, say 20,000 miles a year, you are still a lease candidate. If you build your lease with higher mileage, you will pay a little more per month than someone who intends to drive less.<\/p>\n But if you were to buy a car, rather than lease it, and drive it for three years, you’d have over 60,000 miles on it, and your car would be worth much less at sale time. Your options could be limited (see our article on ideal time to trade in a vehicle).<\/p>\n <\/p>\n Yes, there does come a point where there are too many miles for a lease. If you are going to put 25,000 miles per year on a car, the lease is going to be so much per month that it won\u2019t be worth it.\u00a0 You are better off financing the vehicle. But for someone who puts the average miles per year (15,000 miles) on a car, leasing is a great alternative.<\/p>\n <\/p>\n Mileage is a hidden danger in leasing agreements.<\/p>\n If you’re careful when you initially set up the lease and account for the right mileage, you won’t have any problems.<\/p>\n Some people will ask, \u201cWhat if I set up 12,000 miles and only do 8,000 miles a year?\u201d While this won’t affect your monthly payments, in three years\u2019 time, your car could be worth a little more because we built in 12,000 miles a year. The lease is based on the residual of a car with 36,000 miles, not 20,000.<\/p>\n <\/p>\n These are the questions you need to ask your leasing agent:<\/p>\n What type of maintenance am I required to do?<\/p>\n What am I responsible for at the end of the lease?<\/p>\n Are there any related fees at the end of the lease?<\/p>\n <\/p>\n That way, there are no surprises.<\/p>\n About 40 percent of our customers lease cars. It can be a great option for the right person. But first, do your homework and know what you\u2019re getting into.<\/p>\n <\/p>\nWhat would you say to someone concerned that he\/she technically won\u2019t own the car?<\/h3>\n
Is leasing more or less expensive than financing?<\/h3>\n
Are there other reasons to lease?<\/h3>\n
Is leasing for people who drive a lot?<\/h3>\n
Is there ever a point in which a leasing is prohibitive because of mileage?<\/h3>\n
What about mileage overages?<\/h3>\n
How can I be smart about this?<\/h3>\n