In today’s economy, many people believe that renting a home or leasing a vehicle is not cost effective, but what if you are not interested in ownership? The fact is, some car owners would rather take advantage of leasing options because they are not ready for the commitment of a long-term loan.
For those who are looking for more space without the high price tag, SUV leasing is an affordable alternative to buying a larger car.
Affordable Monthly Payments
One of the main benefits associated with leased vehicles is that your monthly payments will be noticeably lower. This is primarily due to the fact that you are not investing extra money to build equity. As a matter of fact, a lease agreement can be up to 60 percent cheaper than most loans, which frees up your income for other bills and expenses. Since sport utility vehicles generally burn more fuel than a standard sedan, low monthly payments also help to offset the cost of gasoline.
The best way to determine if SUV leasing suits your budget is to calculate your monthly income and expenses. Once you have decided how much money you can designate for payments, compare financing and leasing options for your vehicle of choice. For example, many well-known insurance companies and banks offer free online calculators for new and used car loans. Other user-friendly sites like Edmunds provide an in-depth comparison that accounts for annual percentage rates, maintenance costs and fuel economy. In many cases, you will find that a monthly lease agreement is more affordable.
Flexible Down Payment Options
Another major consideration when it comes to obtaining a new vehicle is the ability to get a lower down payment with SUV leasing. Depending on the dealer, you might even be able to waive the down payment entirely, which makes it easier to contend with tag and registration fees. However, leasing companies that advertise monthly payments that are drastically lower than most local competitors may require a sizeable down payment to secure promotional rates. Furthermore, the leasing agreements are usually calculated based on your credit, so be prepared to explore other options if you score is below average.
Minimal Repair Costs
When it comes to caring for your vehicle, it is also important to note that SUV leasing protects you from paying for expensive repairs. For instance, the warranty on a new car lasts approximately three years. After this time period, you are obligated to pay for any repairs out of your own pocket. With a leased SUV, you can enjoy the security of a comprehensive warranty for the duration of the agreement before trading it in, and all you need to worry about is regular maintenance, such as oil changes, tire rotations and brake replacements.
The only downfall to this scenario is that a leasing company can penalize you for ignoring regular maintenance requirements. With SUV leasing, these tasks do not normally fall under the terms of a warranty, so it is your responsibility to schedule routine checkups with a dealership or local garage. If you have trouble remembering your appointments, some companies can schedule your maintenance visits ahead of time or call you to issue a reminder.
Lower Sales Tax
When you choose to finance an SUV, taxes are calculated based on the overall value of the vehicle. A lease agreement, on the other hand, allows you to save on taxes by spreading the amount you owe throughout the length of the contract. In addition, taxes for SUV leasing are based on a portion of the vehicle’s value, so the cost added to your monthly bill is still nominal when compared to a monthly loan payment.
What if you decide to make a down payment so you can get a better deal? In most areas, state and local sales tax will be applied to the down payment, and you will be expected to pay this amount when you sign the lease. Other states, such as Texas, Georgia and New York still require up-front payment for sale taxes, while others apply property taxes to both purchased and leased vehicles.
No Need to Sell
SUV leasing also takes the stress out of selling a used car. No matter how much you invest in a vehicle, it can be difficult to find a buyer who is willing to pay a fair price. In fact, some car owners spend hundreds of dollars installing expensive upgrades only to find that potential buyers would rather put the money into a newer model. When you choose to lease, you are not burdened with the pressure of selling a used SUV, and you can move on to a newer model without going through the process of a trade-in.
Additional Insurance Coverage
Finally, SUV leasing can prevent unexpected losses due to accidents or theft. When you purchase a vehicle under a loan agreement, your insurance only covers certain expenses, but leasing companies often include extra coverage to minimize financial vulnerability. This is known as gap protection because it essentially fills the holes in your existing plan. Those who choose to apply for a loan can still receive gap coverage, but it will be an added cost on top of your current premium.
Now that you know how leasing can give you more financial freedom, you can identify the best possible arrangement for you and your family. Just remember to weigh the pros and cons of SUV leasing and consider the underlying motives for your decision.