LEASING

Deciding whether to buy or lease your next automobile requires careful planning if you want to get the best deal possible.

When you buy a car, much like anything else, you pay for the entire cost, regardless of how many miles you drive it. You typically make a down payment, pay sales taxes and pay an interest rate determined by your loan company. You make your first payment a month after you sign your contract.

When you lease a car, you pay for only a portion of the auto's cost. You have the option of not making a down payment, you pay sales tax only on your monthly payments (in most states), and pay a money factor that is similar to the interest rate on a loan. With leases, you may also pay extra fees and possibly a security deposit that you don't pay when you buy. You make your first payment at the time you sign your contract.

Most leased vehicles come with gap insurance or coverage, but when you buy a car you will also need to buy a gap insurance if you want to be protected. Gap coverage or insurance pays the difference between what you owe on your loan or lease and what your vehicle is actually worth if your car is stolen or destroyed.

Short term monthly cost of leasing is always significantly less than the cost of buying.
For the same car, same price, same term, and same down payment, monthly lease expenses will always be 20%-50% lower than loan payments on purchased vehicles.

Lease also gives you the possibility of the tax deduction. Since a lease is an expense, you don't own it, therefore it's not an asset which elevates the value of your company, but it's a vehicle you can use as if it is yours.

In direct comparison, a lease is always significantly less than purchasing a new vehicle. So, unless you can pay cash for a car, leasing is the way to go.