Vehicle Leasing

June 12, 2008

Buying a car is an important investment and rite of passage. A car can mean a great many things to different people; freedom, transportation, and even as a collector item. Whatever the meaning a car holds for the consumer it is a purchase that should be done wisely. Consumers have several options open to them when it comes to the actually purchasing of the car. If you can pay cash upfront that just might be the best option available to you. Another option is leasing.

Leasing a vehicle is really just a way of saying that you are renting it out. By leasing you agree to certain conditions and terms that are agreed upon by you and the leasing company. The terms can include any number of things including the amount of miles you are allowed to drive and the condition you keep the vehicle. While these terms can seem restrictive many find them perfectly acceptable or are willing to live with them at the very least.

There are two types of leasing options. The first; Closed-end lease, is the most popular for the average consumer. At the end of the leasing period you have the option to either walk away or with the payment of a few fees you can own the car. This is a great alternative for those unable to pay in full and for those who do not want to take out a third party loan. The second option called the Open-end lease is mostly used for businesses that need vehicles. How this works is that the car’s value is determined when the leasing period is over. All the consumer must do is pay the difference between this price and the value of the car as pre-determined at an earlier date. This method proves to be more expensive and is, really, not the best option for the everyday consumer.

As discussed earlier, leasing a vehicle is a preferable method of ownership since you will not have to have the cash upfront nor will you have to take out a loan from a bank or other institution. Other benefits to leasing your next car include a lower monthly payment and a reduction on those upfront costs. In some cases the monthly payments can be as much as 50% lower then what you would pay if you were buying the vehicle. This is since you are paying just part of the car’s total value over a predetermined amount of time. As for those upfront costs you will just provide a down payment and then of course the fees for tags, title, and registration.

Now, many do not like the fact that you will not own the vehicle during the contract period. In fact you will have to comply with a set of restrictions while using the car or truck. If you fail to do so you will be subjected to fees and penalties.

Overall, leasing your next vehicle just may be the right move for you. Many consumers have bought their vehicle this way with little to no trouble. You just have to be aware of all the terms in the leasing contract to avoid any extra fees or charges.