Industrialist J. Paul Getty is credited with saying “if it appreciates buy it, if it depreciates, lease it”. While heeding this advice when buying a car shows solid financial judgment, a buyer’s particular circumstances can require a different approach to that new set of wheels.
When buying a new car, consumers are presented with two options: buy a car and finance it, or choose to lease it. When leasing a car, the buyer has the car for a set length of time and returns the car to the dealer 2-3 years after it is purchased. In most instances, leased cars must be kept under a mileage limit and retuned in like-new condition.
One of the great things about leasing is that you can drive a lot more car for less monthly payment than if you finance the vehicle; however it is important understand the limitations and requirements that come with a lease.
The backbone of any lease payment calculation is the vehicles “residual value.” The residual is always expressed as a percentage, and represents the expected amount of value of the MSRP that the vehicle will retain at the time of the termination of the lease period. In layman’s terms: how much value will the car have after your lease is up? When comparing cars, the higher the residual percentage is, the lower your monthly payment will be because the more value the vehicle has at the end of the lease period, the less you have to pay for.
Another factor to consider when leasing is the available mileage allowance. Since mileage on any car is a key indicator of value, the more miles you will be putting on your vehicle over the period, the higher your monthly cost will be. On average the majority of leased vehicles allot between 10,000 and 15,000 miles per year with the greatest percentage at 12,000. When you sign up for a lease pay close attention to the miles set in the lease. Beware of exceeding this limit, as lease companies can change up to .30 cents per mile over the annual cap.
When looking to either buy or lease a new car, let Daily Voice Autos simplify the process for you. For the first time ever, shoppers can see real dealers’ prices complete with accurate rebates and monthly payments for a variety of makes and models all without contacting a dealer. It truly is 'Car Buying Perfected'.