Many find leasing to be an attractive alternative to buying. Monthly leasing payments are generally less than monthly loan payments.
When you lease, the leasing company “owns” the vehicle. You may or may not have an option to purchase the vehicle at the end of the lease. You may not be able to predict your mileage over the life of the lease (costing you money if you drive too few miles or exceed your mileage limit). You will be responsible for returning the vehicle in good condition and you may be charged for cosmetic repairs you ordinarily would not make. You will be obligated to return the vehicle at the end of the lease, which may not be convenient for you. In general, will you be treated fairly by the dealership at the end of the lease (particularly if you do not acquire your next vehicle from them)?
Should you purchase GAP insurance? If so, how much should you pay for GAP?
Leasing is a more complex transaction. What is the capital cost reduction? How does this compare to a discount and/or rebate on the vehicle? How is the residual value determined? What is the effective interest rate used in determining your monthly lease payments? Is this a fair interest rate? The monthly payment sounds good, is it the best you can get? Lease payments are negotiable as they include an element of “purchase price” and “financing”.
When you consider all the factors, does leasing really save money in the long run? Leasing can be very profitable to a Dealership as most customers only focus on the monthly lease payment as they are unable to evaluate the individual factors included in their lease.