Why dealerships lease cars

Some people even opt for a more luxurious car than they otherwise could afford. Make sure your insurance covers any charges that may still be due even if the car is totaled before the lease runs out.

When the lease is up in a few years, you can return it and get your next new car. Many new cars offer a warranty that lasts at least three years. So when you take out a three-year lease, most of the repairs should be covered.

Leasing arrangements largely eliminate the hazards of a significant unforeseen expense. Are you the type of person who hates to haggle? If so, you probably hate the idea of selling your used car to a dealership or a private buyer. With a lease, you simply return the car. The only thing you have to worry about is paying any end-of-lease fees, including those for abnormal wear or additional mileage on the vehicle. If you use your car for business purposes, a lease will often afford you more tax write-offs than a loan.

Leases also provide less flexibility than buying. The contract discourages any customization. In fact, the finance company may require that you reverse any modifications prior to returning it, which can be both a pain and an extra expense. Also, if the car is totaled in an accident before the end of your lease, you may be liable for some costs not covered by your car insurance unless the lease includes car gap insurance.

This type of insurance covers any costs that might be required before the lease expires, even if the car is scrap. If you decide that taking out a loan is preferable to leasing a vehicle, then it's worth using an auto loan calculator to determine what loan term and interest rate would best suit your needs.

When you buy a car you either pay cash or get a car loan and take title to the vehicle. If you finance the car you build equity in the car over time. Automobiles are depreciating assets, however, and can sometimes depreciate faster than a person builds equity through payments. When leasing a car you make lease payments but never take title to the vehicle or build equity. When the lease term is up you simply turn in the car. The main disadvantage of leasing is that you don't build equity in the vehicle as you make lease payments.

Lease terms can be anywhere from 2 - 5 years but can be ended early, though early termination typically involves a cancellation fee. Leasing allows a person to get a new car every few years if they wish and keep their payments relatively stable if leasing the same make and model of car. Leasing also frees the lessee from having to dispose of the car at the end of the lease term by selling as a private party or trading it in on another car.

In conclusion, whether it is leasing or buying, it is important for consumers to conduct research and understand all the terms of the contract.

Many times, the consumer will just need a little extra help to come up with this fee, and that is where CrossCheck comes in. With the Multiple Check program, CrossCheck stands in at the point of sale and allows the consumer to write up to four checks to be deposited over the next 30 days, so they have some extra time to come up with the money without applying for credit or paying any additional interest.

Multiple Check is an absolutely indispensable tool for the dealer, whether they are leasing or selling a car, and best of all, it gives the consumer peace of mind, resulting in a higher Consumer Satisfaction Index score for the dealer! So this is a win-win all around. Learn how Multiple Check can increase sales at your dealership by downloading our free guide. Topics: Brandes Elitch , Auto Dealerships.

Why CrossCheck? Testimonials Events Press Releases Careers. CrossCheck Blog. Early Auto Leasing Most people think leases are a relatively recent development in the United States.

Contemporary Auto Leasing The modern auto lease was invented by Eustace Wolfington in the early s. Predicting Residual Value As an aside, here is an example about the importance of predicting residual value. Down Payments in the Sales Process When consumers BUY a car, they may not have to make a down payment, depending on their credit score.

Consumers can do the numbers to determine what the costs will be for each option. Side-by-Side Comparisons We will compare two three-year leases against one five-year purchase loan. Next, compare the monthly fee for the five-year loan to that of the three-year leases, and add up the totals for this period the sixth year will be free for the purchased car. When you end the lease, you have no equity in the car. When you pay off the bank loan, you have whatever equity is left, which is a substantial number on a six-year-old car note: the average car on the road today is 11 years old.

He has written hundreds of articles on the subject of car buying and taught thousands of car shoppers how to get the best deals. Got a Question About This Article? Related Car Leasing Articles. New Cars. Used Cars. Sell Your Car. Legal Stuff. Some links and services recommended on this website provide compensation to RealCarTips.

All recommendations are based foremost upon a good faith belief that the product, service, or site will benefit car buyers. Read the full Compensation Disclosure for more details. Our advice is to always ask the dealer what the money factor is and when they tell you, multiply that number by 2, in order to get the equivalent APR percentage rate.

As you can imagine, this means more lease deals, in general, for the dealer, which means more money for them as well.