Sure, about 80 percent of Hyundai buyers in the Boston Area either pay cash or finance their purchase with a loan- but you’re considering joining the other one-fifth of consumers willing to forgo ownership for a new set of wheels and the short-term benefits that leasing provides.
Maybe you’re self-employed and can write off your leasing payment as a business expense. Or maybe you’re trying to get into a luxury model for less upfront cash. Or maybe you demand the latest safety and technology innovations and don’t want to be saddled with a 60-month loan term. Or maybe you just like driving a new car every couple of years.
Most consumers don’t need a new car every few years, but maybe you’re in the minority or maybe you just want one.
What’s best for you- buying or leasing?
For many leasing consumers, the monthly payment is the carrot. When interest rates are low, lease payments may be close to payments for buying a car outright. When interest rates go up, leasing becomes more attractive. But even tossing out interest rates, the reliability and quality of new cars can make leasing appealing. It often comes down to residual values, or the worth of a car after several years of ownership, experts say.
Lower payments and lower interest rates aren’t the only reasons to lease, because leasing also offers purchasing flexibility. Lessees don’t have to worry about owning a depreciating asset (as automakers know all too well) or dealing with hefty repair bills. At the end of the lease term, (assuming they’ve kept the car in good condition and stayed within prescribed mileage limits), they can simply turn in the car and walk away.
Of course, those benefits have a price. While it’s fun to have a new car every few years, consumers who lease have nothing to show when the lease is up; they have to either lease another car, or bite the bullet and purchase a car.
There are many benefits to leasing beyond lower payments and less taxes. In most cases the lease payment would be the same as a five or six year loan. Consider if you wanted to trade in that same car you had a five or six year loan on, but after only 3 years. At that point you would have some maintenance due. After 3 years of driving a car usually needs brakes,tires and some TLC that is not cheap.
Also, at that point, depending upon how much of a downpayment- you would more than likely have negative equity.
With a lease at the end of term you have options and you can get something different and new without worrying about negative equity. J. Paul Getty (one of the first billionaires in the USA) had a saying , “Buy things that appreciate. Borrow things that depreciate”. This makes sense as every month the new edition of NADA or Kelly Blue Book comes out with used car values, those values always go down. Always.
There really is no exact right or wrong way. The way you feel most comfortable is the best for you. Before your next purchase you should compare and see how you fit. Whether you feel leasing or buying is better for you, here at Mirak Hyundai we are here to help you weigh out your options. (Click here to contact us.)
Mirak Hyundai is a Boston Area Hyundai dealer in Arlington, MA