WHY CAR LEASING IS CONSIDERED MORE PROFITABLE THAN A LOAN? ARE THERE ANY DOWNSIDES TO LEASING AS SUCH?
Leasing is almost the same loan, but more often with smaller overpayments. And here's why:
1. New cars: The leasing period is usually 2 times less than the loan period. You always drive a new car, not a 5-6 year old car like after paying off a loan (Average loan term is 5-6 years)
2. Security of your investments: Everything you pay is deducted from the cost of the car. At the end of the leasing period, you have every right to buy the car at the residual value. You can even take out a loan for this amount. But you have 3 whole years to decide if you need this car on credit or not.
3. Smaller monthly payment:
1. New cars: The leasing period is usually 2 times less than the loan period. You always drive a new car, not a 5-6 year old car like after paying off a loan (Average loan term is 5-6 years)
2. Security of your investments: Everything you pay is deducted from the cost of the car. At the end of the leasing period, you have every right to buy the car at the residual value. You can even take out a loan for this amount. But you have 3 whole years to decide if you need this car on credit or not.
3. Smaller monthly payment:
- In leasing, you pay only the depreciation of the car for the leasing period at a certain mileage, and not the full cost of the car as in a loan.
- The interest rate on a lease is usually lower than the rate on a loan.
- The interest rate is charged only on the depreciated cost of the car, and not on the full cost of the car as in a loanе
- You also pay taxes only on the depreciated cost of the car, and not on the full cost of the car as in a loan
4. Security in case of incidents or validation of the secondary market: In case of an accident and, as a result, the loss of the value of the car in the secondary market, your payment does not increase, fixed in the contract. This is a bank loss.
5. Ease of car exchange: It should be taken into account that in the USA there is practically no secondary car market between individuals. Almost no one buys a car for more than $10k -$15k for cash. Such amounts are usually taken on credit or leasing. It is practically impossible to issue an official and safe loan at a good interest rate between individuals. Therefore, buying any car more expensive than $10k -$15k you are practically doomed to sell it only to the dealership at a lower price. After all, the dealer needs to sell the car at the market price or less, while earning a few $1000 and covering the cost of the minimum service package that they are required to do before selling any car. Therefore, you will buy a car at a price much lower than the market price. But in leasing and after its expiration, you can simply return the car and choose a new car for leasing, which makes it easier to exchange a car than with a loan.
6. Availability of lease renewal to a new owner: Many manufacturers allow the renewal or resale of a lease to a new owner, which allows me to change a car every year.
- The interest rate on a lease is usually lower than the rate on a loan.
- The interest rate is charged only on the depreciated cost of the car, and not on the full cost of the car as in a loanе
- You also pay taxes only on the depreciated cost of the car, and not on the full cost of the car as in a loan
4. Security in case of incidents or validation of the secondary market: In case of an accident and, as a result, the loss of the value of the car in the secondary market, your payment does not increase, fixed in the contract. This is a bank loss.
5. Ease of car exchange: It should be taken into account that in the USA there is practically no secondary car market between individuals. Almost no one buys a car for more than $10k -$15k for cash. Such amounts are usually taken on credit or leasing. It is practically impossible to issue an official and safe loan at a good interest rate between individuals. Therefore, buying any car more expensive than $10k -$15k you are practically doomed to sell it only to the dealership at a lower price. After all, the dealer needs to sell the car at the market price or less, while earning a few $1000 and covering the cost of the minimum service package that they are required to do before selling any car. Therefore, you will buy a car at a price much lower than the market price. But in leasing and after its expiration, you can simply return the car and choose a new car for leasing, which makes it easier to exchange a car than with a loan.
6. Availability of lease renewal to a new owner: Many manufacturers allow the renewal or resale of a lease to a new owner, which allows me to change a car every year.
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So, if you need to have 2 or more cars in the family and at the same time want to minimize the budget of monthly payments, then leasing can be the most profitable solution.
Leasing and credit have different advantages and disadvantages, and the choice between them depends on the individual circumstances of each buyer. Therefore, before making a decision to buy a car, you should carefully study the various financing options and consult with our experts for a detailed comparison of all the options available to you.
- What are the disadvantages of leasing?
- Limit on mileage: if there is only one car in the family and the average annual mileage exceeds 15k miles, then it is more expedient to take out a loan. In leasing, the average cost per mile is $0.30
- Floating price: Leasing conversion programs change every month, and sometimes more often. Therefore, it is impossible for an ordinary layman to understand how much this or that car should cost today. Sometimes leasing programs are worse than a loan offer. In order to be able to check programs and make recalculations, you need to have access to special software that only a dealer or broker has.
- Sophisticated lease recalculation programs: since there are many variables such as the selling price, a variety of registration fees, residual, money factor, additional point, rebates, taxes, etc., it is much easier for an experienced seller in a dealership to hide the overpayment and confuse the client's head
- Rent or sublease: the leased vehicle is not allowed to be rented out to 3 persons.
Perhaps these are all the minuses, but for almost all of them an experienced specialist of our company can help you find a solution:
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ADVANTAGES of buying with PANAUTO MIAMI:
- - WHOLESALE PRICES
- - ONLY THE BEST SERVICE. 5 STARS – GOOGLE, FACEBOOK, DEALRATER
- - 8 YEARS OF EXPERIENCE IN LEASING AND CREDIT FOR EMIGRANTS
- - ACCESS TO PROGRAMS OF MORE THAN 20 MOST POPULAR CAR MANUFACTURERS
