The percentage of drivers who opted to lease rather than purchase a vehicle rose from 31 percent in 2019 to 52 percent in 2020, according to a study by J.D. Power.
Ever wonder if you’re a good candidate for leasing? Here are a few things to consider from Grainger Nissan of Anderson Sales Consultant Brandon Paquette.
How many miles do you drive per year?
If you drive more 18,000 miles per year, you’re probably not a good candidate for leasing. When you think about leasing, consider how your life could change in the next two to three years, such as a job change or adding to your family – anything that might disrupt the number of miles you drive.
What are the benefits of leasing?
If you like to stay in a new car – trading vehicles every two to three years, leasing allows you to do that by paying for vehicle usage rather than the vehicle itself.
That means your debt-to-income ratio will be a bit less, which frees you up for other purchases. Also, the vehicle is under full warranty, so there are no out-of-pockets expenses for repairs.
What are your options at the end of the lease?
At the end of a lease, you can either turn in the vehicle, buy the lease and make payments on a lesser amount than a new car, or trade the car for something else.
When you lease a car, a bank owns it, and you lease it from the financial institution. Therefore, your insurance company may require additional coverage which could increase insurance premiums. However, monthly lease payments typically are a good bit less than a purchase.
What determines the price of a lease?
Lease prices are based on usage. In essence, you’re paying for the depreciation of a vehicle, Paquette explains. If a car will depreciate $12,000 over three years, divide $12,000 by 36 months and that’s your payment. Also, there is no interest on a lease payment.
What are lease options?
When leasing, you can select a two-year or three-year time frame and a mileage cap – 10,000, 12,000 or 15,000 miles. If you exceed your mileage, you must pay for the extra mileage typically at .05 per mile.
For more information on leasing or purchasing a vehicle, visit GraingerNissanofAnderson.com or call (864) 324-0650.
