Most people agree when it comes to vehicles: “you lease what you cannot purchase, and buy what you don’t want to purchase.” This is a good analogy for leasing vs. buying in automobiles, since on a lease your payments are usually lower than on a purchase. Although there are some exceptions/variations to this rule. But for the most part, on a lease, your down payment is usually lower than on a purchase. If you decide you like the vehicle after the lease is over, you can opt to purchase it: when you initially sign the lease contract, this is explained to you by the loan officer. Let’s use a Porsche Cayenne as an example. You lease this vehicle for say $750.00 a month (if you purchase this car your payments would be well over $1000.00 for at least five years) for three years. The loan officer tells you the residual after your lease ends is $40,000; this means you’ll have to come up with this money when the lease ends in order to keep the vehicle. Today, they make it much more easier for people to keep the car, and all sort of options are available for you; all you need to do is ask the loan officer and he’ll explain what your options are when your lease comes to an end.
If you’re a business owner, a lease is probably the best choice of the two. Not only can you write off a substantial amount at tax time, but you can also write off mileage. People who own businesses are usually the best candidates for leasing. Not only can you lease a good looking/brand new car, but you can also write off a great deal of expenses associated with the car, and surely enough after the three-four years are over, you drive back into the dealership and lease another car. If you have a successful business and need to drive clients around; you’re a prime leasing candidate, not only because you can write off a great deal at tax time, but you can lease a lot more car for your money than you can buy. Like the old saying goes: “Appearances are everything “; so what would you look more successful in: a Camry XLE, or a Lexus ES 350? The answer is obvious….
Now for the “cons” of leasing. If you don’t own a business, then leasing is probably not the best idea. You cannot write off mileage or anything else for that matter. Also, in a lease you’re limited on the mileage. There are many types of leases out there. Some people opt for a 10,000 miles a year lease, others for a 15,000 miles a year, and some even more. Any excess mileage at the end of your lease contract you’ll be charged for. This again is explained at the time you sign the lease. It’s not uncommon for people to lease cars on a 10,000 mile agreement for say three years, and when the car is returned it has 45,000 miles on it; when it was really only suppose to have 30,000 miles. This will get you in trouble when you return the car, and you’ll most likely be charged additional money upon returning the vehicle. Also if the condition of the vehicle is below par when you return it, you could be charge extra money by the dealer so they can restore the car to “tip top shape,” and eventually sell it. So leasing is not for everyone, but for many: its the only way to go.