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Leasing now accounts for nearly 40% of all new vehicle deliveries in North America. In the past, most people were limited to bank loans for their new car purchases. Today, more and more cost-conscientious individuals view leasing as the better alternative, offering greater flexibility. Some benefits to leasing include the following:• Lower Monthly Payments Leasing is a different and very unique means of financing a vehicle in comparison to the traditional loan alternative. Leasing allows for the use of a vehicle over time at a lower cost per month, freeing up cash to be used for other purposes. Leasing typically provides for lower monthly payments and lower up-front costs than you would pay on a loan for the same vehicle. • Pay Only For What You Use A lease is based on the anticipated use of the vehicle over a given time period. This time period is measured in months, ranging from 6 to 60 months. With a traditional loan, the vehicle is written down to a zero balance, usually over a 60 or 72 month term. Leasing, in contrast, places a value on the vehicle that reflects the expected usage. If an individual normally likes to drive a different vehicle every three years, a 36 month lease would allow them to pay only for the usage desired, then obtain a new vehicle. If this same individual financed a vehicle over a 72 month period on a loan, they would be left with the hassle of trying to sell the vehicle privately, or potentially losing money by trading the vehicle after 36 months. • More Vehicle For Your Money Because you only pay for the portion of the vehicle that you use when leasing, lease payments can be much lower per month than loan payments, allowing you to drive a more expensive, better equipped car for the same payment as a traditional loan. • Increased Cash Availability Leasing utilizes the capital of the Lessor and does not utilize the borrowing capability from your own personal credit line. Your money is not tied up in a depreciating asset. Leasing frees up capital for other purchases and business opportunities. • Tax Savings with a Lease versus a Purchase Loan With leasing, taxes are collected on the monthly lease payment over the term of the lease (ie. GST). With a loan, all taxes on the vehicle price are paid up front. As a result, you end up paying interest on this tax amount. If you elect to purchase the vehicle upon expiry of the lease, you would then pay the tax on the residual value. • Easy Vehicle Disposal Leasing allows you to replace your vehicle before costly age-related automobile maintenance poses a problem, minimizing your exposure to declines in trade-in values. • Lease End Options You may purchase the vehicle at the Lease End Value indicated on your contract; You may return the vehicle as provided in your lease; and You may lease or finance another new vehicle • Simplified Record Keeping Leasing provides you easy tracking and reference for accounting purposes. SUBSECTIONS: Types Of Leases
| Leasing Vs. Buying |
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