The Top Reasons to Lease vs. Buy

Reason # 1, your monthly payments will be lower than they would be for a similar term purchase. That is because in a lease you are only paying for the part of the vehicle you are using. The other part, the residual, you are not paying for as the financial institution is getting it back when you turn in the car to them.

 

Reason # 2, you pay less taxes. In California, when you lease a car, you make your lease payment plus sales tax on your payment. So if you payment is $300, your sales tax rate where you reside is 8.75%, your monthly tax payment is $26.25. This amount multiplied by 36 months (the most common term for leases) totals $945. The sales tax on a $25,000 vehicle would be $2,187.50. This is over a $1,000 tax savings!

 

Reason # 3, you have more options at the end of a lease. One, you can turn in the car. You can’t do that if you buy the car. Two, you can buy the car at the end of the lease. Your choice, turn it in or buy it. Buying you car at the end of the lease also has some benefits.

 

Reason #4, you have protection. They call it “Gap” insurance. It means, should you get in an accident during your lease and your car is totaled, Volkswagen Credit will pay off the full value of the car. Most people don’t think about this because, let’s face it, most of us never think we will ever get into an accident. Leasing is a very good way to protect your financial security.

 

Reason # 5. Transfer of risk. When you buy a vehicle, 100% of the risk of depreciation is on you. When you lease, that risk is transferred to the leasing company. Your needs may change and the used car market is unpredictable. Why burden all that risk? And in this CarFax era, if the car you own is in an accident, your investment has likely just depreciated an additional 20% or more! On the other hand, if your leased vehicle is in an accident, as long as the proper repairs are performed the leasing company will take the car back and the absorb that decreased value.

 

Reason # 6. I like to own my car and don’t want to just rent it. In the early 1900’s John Paul Getty advised against buying depreciating assets. After all, would you buy your house if you knew it was going to be worth 50% of the purchase price 3 years from now? With a traditional purchase, you typically don’t own your car for 5, 6 or 7 years. If you’re lucky, you might have some equity around the 4th year. We say “might” because the norm these days is large deficits (called being “upside down”) on trade-ins because customers financed their cars for longer than they really wanted to drive them, experienced a deficit, rolled that deficit into their next car’s loan and repeated the process again and again. With a lease, you can own your car – if you decide that’s the best for you. Consider it a 3 year test drive with benefits. If at the end of the lease you still want to own the car, great! You can by exercising your purchase option. That’s why leasing isn’t renting. When you return your rental car to the agent, he doesn’t present you with your end of rental purchase option! With a lease, you defer your option to buy with a lot of financial protection along the way!

 

Reason # 7. I drive too many miles to lease. Just the opposite is true! You can buy extra miles on your lease for less per mile than your purchased car will depreciate!

 

Reason # 8. I am afraid of the lease-end penalties. In your lease, you’ll estimate and pay for the miles you drive. If you drive more miles, you’ll have to pay for those extra miles if you turn your car in (if you trade it in, those extra miles may cost you less and if you opt to keep your car there is no charge for those extra miles.) Then again, on your purchased car those miles have to be paid for too – in the form of a lower trade-in value.

 

Reason # 9. You always get to drive the latest and greatest Technology. Getting a new car every 3 years (our most popular lease term) means you have the latest technology available.

 

Reason # 10. We have great lease rates on all our models. Be sure to check out our lease specials on our website here.

Questions?
Please speak with our trade advisor for more information.