Why Lease?

Why Lease?

When you find the perfect car or truck there is still the question of how to pay for it, and there are two basic options available to you: Buying and Leasing. Many people ask us what the difference is, and whether leasing is a good deal. The answer is not the same for everyone, but the question should be considered every time.

When you buy a vehicle you may pay cash, or you may take out a loan. In either case, one thing is constant: the vehicle will depreciate. As the owner of a vehicle, your real expense at the end of the ownership cycle (when you sell or trade that vehicle) includes the total amount of the depreciation that occurred while you owned the vehicle.

For example, if you purchase a new car today and total amount you pay is $15,000, you have an asset that is now worth $15,000 and it really has not cost you anything. As you drive the vehicle in the coming months and years the value of that vehicle will decrease. Lets say you drive it for three years. At the end of the three years you decide it is time to get a new vehicle, and when you research your purchase on the web you find that vehicles like your current vehicle are being sold now for $10,000. The difference between what you paid for your vehicle and what it is worth now is your depreciation expense.

The amount of this depreciation expense is determined at the end of your ownership of the vehicle, and is an unknown to you when you buy it. What if the demand for the vehicle you buy is reduced for some reason that is totally out of your control? The best example of this (and there are many others) is an accident that is not your fault. Lets say that you take your new vehicle to the store after you take delivery and while it is in the parking lot it is hit by an out of control car and is damaged enough to require a damage disclosure. The value of your vehicle will now be less at the time you decide to sell it, and that full cost is yours.

Leasing provides a few benefits that owning your car cannot. The first benefit is that the cost of depreciation is determined before you take delivery. When you agree to a lease payment you are agreeing to pay that much depreciation on the vehicle, AND NO MORE! If something changes the value of the vehicle and increases the depreciation that occurs during the time you are driving it, the increased expense goes to the leasing company!

We encourage every customer to look at leasing every time they purchase and decide if it is a good option for driving that vehicle. Make sure your sales consultant shows you the lease payment for your next vehicle so you can make an informed decision!