This is the eighth of nine articles in our Blog Series Is Leasing Really Fleecing? In our previous segments, we discussed many of the disadvantages of leasing. These disadvantages include the higher costs, the high and sometimes surprising end of lease charges, and some of the pitfalls of leasing, including the high cost of early termination. We also discussed how customers who lease may be more vulnerable to unfair car dealer practices. This article will answer the question of whether it is ever advantageous to lease.
Leases are popular among individuals who use their car for business purposes, because the lease payments are fully or partially tax deductible depending upon the extent of business vs. personal use. Although car purchasers also get a tax deduction, the tax calculations are much simpler in leases.
Another advantage of leasing is that a consumer may have doubts about the long-term value or performance of a newer model. For example, when car shopping this past year, I considered a BMW i3, an electric vehicle that was also a new model. Ultimately, I decided to buy a hybrid instead. But, if I had selected the BMW, I probably would have leased it as a “hedge” against any technical problems that might arise. If the car turned out to be problematic, it would have been a major advantage to simply turn it in at the end of the lease.
Perhaps the advantage most frequently cited by people who decide to lease is that leasing enables them to drive a more expensive car than they could otherwise afford on a monthly basis.
Leasing is also sometimes advantageous for consumers who want a new car every three years. Many lease deals are less expensive than the cost of purchasing and trading-in cars every three years. Those savings may vanish if the consumer’s expected use of the vehicle turns out to be inaccurate. But, the right consumer leasing the right car might save some money if consumer drives the right number of miles during the lease term.
So, despite the pitfalls, there are some advantages to leasing. But, do those advantages outweigh the disadvantages? In our ninth and final installment, we will answer the question “Is Leasing Really Fleecing?”