what is the difference between leasing a car and financing a car?which one is better for the customer?

Question

I'm kind of confused..if leasing a car means that u don't actually own the car, why people do that?? what's the benefit of any of these two methods?

Answer 1

Leasing is for people who want to drive a better car than they could otherwise afford, period.

Since a lease is basically renting a car, you only pay for the use of the car and don't contribute any money towards ownership, so the monthly payment of a lease will be less than if you wanted to buy outright. The downside is that at the end of the lease (typically 2-3 years) you own nothing. You can still buy the car, but the lease + buy off amount is always going to be more than if you would have just bought the car in the first place.

Leasing can also potentially be cheaper than buying if you want to drive a new car every 2-3 years, since buying and trading-in that often means you get hit twice -- by steep new car depreciation, and the fact that dealers give lowball trade-in values. However, whether you lease or buy, getting a new car this often is a huge money losing proposition.

So basically most people lease because they think "I can drive a Mercedes for only $400 a month on a lease, when it would cost $600 a month if I bought it!" without any regard for the true cost in the long run.

Answer 2

When you lease a car you only pay for the portion of the car that you're using. All the numbers are set for the deal, so you know exactly what you're getting into when you sign up. Because leases are typically 24-36 months you end up paying for about half of the value of the car. What this means is that you can get more car for your money if you lease vs. purchase. That same 300 dollar payment on a purchase will get you a 17K car. But you could lease a 25K car for 36 mos for the same payment.

But it's not a golden road. Leasing requires that you get a new car much quicker than financing (which most people who lease want to do b/c they want the latest and greatest). This equates to a lot of "wasted" money in taxes and charges. Insurance rates are typically higher if you lease. And if you put "excessive wear and tear" or go over the allotted annual mileage of the lease you will pay stiff penalties when you turn the vehicle in.

So, what's "excessive wear and tear"? Good luck finding out. At the end of the lease an inspector will come out and assess damage to the vehicle. These guys are like IRS agents conducting audits.

And, when you lease you don't "own" the car, nor do you have any ownership privileges. And, you may face stiff penalties for getting out of the lease early.

Leasing is for the very few who have money, want a new car often, and like to drive the luxury brands. That's why you don't see a lot of leases on Toyotas but you do on Lexus.

Answer 3

Some of my friends do it and their reason is because they get new cars more often. Payments are usually less and you still have the option at the end of lease of buying it out right and since it was brand new when youo got it you are the only driver on it. you know if it is good or not. You also get to change the kinds of cars you get after your leases run out. I believe they also take care of the routine maintenance on them. Oil changes and stuff and it doesn't cost yoou because they want you to come back to the,.

Answer 4

financially, most of the time leasing is a really stupid thing to do. Every once in a while there are good deals, but most of the time leasing is the option for those who are not good at math. Financing a car is not a much better alternative.
The best thing is to swallow your pride and buy a slightly used car in good shape and pay cash for it. That way you don't owe anything to anybody. But then some people just have to have the latest and greatest.... oh well.
read this article:
http://www.wnd.com/news/article.asp?ARTICLE_ID=40776

Answer 5

the reason why fairly some human beings employ vehicles is because 2 out of three human beings commerce their vehicle each 2 to three years at the same time as the warranty is executed. If those human beings financed for 5 - 6 years like maximum folk might want to, to get a useful price, they many times owe more advantageous on their vehicle than it really is fairly worth and they finally end up rolling a number of that inequity into their next vehicle and raising the price even more advantageous. in case you employ, before each little thing, your price is many times decrease, 2d of all, you're in basic terms identifying to purchase the depreciation of the vehicle. once you get to the accurate of the employ, you've an decision to purchase the vehicle for the residual fee, or in basic terms the unpaid element. If this isn't any longer fairly worth that volume, then you definitely in basic terms hand the keys to the broking service and commence over and also you enable the employ organization take the hit at the same time as they promote the vehicle at public sale. in basic terms be careful once you're structuring the employ on the starting up and ensure you position it up for the miles you'll rigidity as a way to no longer be charged for extra mileage. i does no longer propose a employ to any extent further than 36 months. And with the help of ways, a employ isn't any more advantageous worthwhile for the broking service. you could negotiate the promoting fee in a employ a twin of in a purchase order. The broking service makes out because there's a gorgeous sturdy danger he is going to be waiting to employ you yet another vehicle in 3 years extremely of taking you out of the marketplace for 5 or 6 years with primary financing. I recomend leasing to my kinfolk and acquaintances.