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A down payment is not required to lease. It's required to get to the advertised lease rate.
Technically yes. But if you are trying to lease an expensive car with a short lease term, if you don't pay the down payment, your monthly payments could suddenly exceed the debt to income ratio they are willing to approve someone for.
They want to get a good chunk of their money upfront, because if a person only leased for 3 months and then defaulted, they've lost money because they can't sell that car as a new car anymore.
I love those low monthly lease payments. Until I take the down payment they want and divide by 36 and add that into the monthly payment. That's when I see a lease is just as expensive as buying.
For a business that can write off the payment instead of having to worry about accounting for a depreciating asset, leasing makes perfect sense. For the average person who doesn't have that tax advantage, it's not much, if any benefit.
Not necessarily true, when it comes to, say, EVs and the like, or even basic sedans, like this $54 Malibu lease:
But there are tons of other lease deals that are similar out there for not so basic economy cars. negotiate the price down, get the incentives, and then talk lease numbers, it's easy to get into a decent new car for under $150 a month, which is comparable to a phone or cable plan. It's easy to budget for a low fixed monthly expense than a higher one that MIGHT get paid off by the time you trade the car in. Or tie up your cash in a depreciating asset that still may need huge repair dollars sunk into it.
Most people keep their new or used cars 3-5 years. In either case you are constantly paying for OR saving up for the next car, so leasing a cheap one makes perfect economic sense when you want your family in the latest safety systems.
Note that just because there's a low lease offer on the manufacturer's web site it doesn't mean that you can actually get that price from a local dealership because those terms tend to be both for the most base model possible and require that the car be from existing inventory on the lot rather than something the dealer has to go out an actively find for the customer elsewhere.
As for leasing, my FIL recently decided it lease a new Impala even though he could have easily paid cash for one- he's just at the point where he doesn't want to have to worry about off-warranty repairs and while he's typically a buy-and-hold sort of car buyer, sadly who know how much longer he'll be able to drive safely.
How about buying used cars, which after they are paid for, begin to fall apart, and cost as much in maintenance as a lease payment would be, effectively crushing your household savings? Cars are a losing game for Americans, and having a 2nd or even a 3rd car in the household is a money pit. we have tried to keep 2 paid for vehicles around, but both are showing their age, and one of them in a costly way.
Lease makes more sense to me, but still, take advantage of the fact that the payment is lower, so don't buy UP when you could own a car that is what is needed for much less than a purchase.
Don't forget that there are end of lease costs, such as excessive wear and tear, and higher insurance costs during the lease, that can really add up. Excess mileage is also and end of lease cost.
Don't forget that there are end of lease costs, such as excessive wear and tear, and higher insurance costs during the lease, that can really add up. Excess mileage is also and end of lease cost.
Well, yeah, if you're the sort that regularly drives over the lease agreement amount, don't do it. But insurance during the lease can still be cheaper than not, depending on the car. My '13 Volt cost less to insure during it's lease than my '06 Mustang GT that was traditionally financed, even though the Mustang was worth half what the Volt was. And there's no end of lease cost if you are simply trading in on the next newest model (and often can make some good gains if you switch brands due to conquest incentives on the newer car).
To many people, perpetual payments of $200/month is better than $500/month for 4 years. $500 sounds scary. $200 not so much.
If someone was willing to lease, why wouldn't they also be willing to stretch out a loan?
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