Aug 15, 2019. photos and content provided by D Bailey
Financing an item is nothing new and so little explanation is needed as to how it works. The total amount of your loan will be paid off including the interest in a linear fashion over the term of the loan. In this article we wanted to outline some of the benefits of leasing vehicles:
Cars Initially depreciate faster than you pay off your finance
As you can see in the above chart, the blue line is your payments to pay off the vehicle from asking price down to $0. The red line is the value of the vehicle over the course of your loan. As you can see through years 1-3 there is a growing gap between the value of the vehicle and what you currently owe which leaves you in a negative equity situation. You don’t typically end up in an even or positive equity situation until year 5-6. What that means is if you want to go trade in your vehicle somewhere not only have you been making your payments, but you also have to pay this negative equity costing you even more money!
They Cost about the same but you have more options
When you sign a finance agreement you are tied to the entire price of the vehicle. With a lease you are only financially responsible for only the portion of the vehicle value for the duration of your lease and then you will have the option to purchase it out at the end. With interest rates being very similar at any point in time and not being financially tied to the entire value of the car but only half of it with the option to purchase the vehicle at lease end for the same price keeps the control in your hand!
Accidents don’t impact you Financially
The only thing worse than being in a serious accident, is being in a serious accident and the insurance company doesn’t write off your vehicle but pays to fix it. Now you are financing a vehicle with a $10,000 – $20,000 accident on it that wasn’t your fault. And unfortunately for you your vehicle is now worth thousands of dollars less.
If this happens while you are leasing a vehicle, at the end of the lease you aren’t penalized for it!
Take advantage of the option to upgrade – Technology is always changing
INFINITI QX INSPIRATION INTERIOR
If you look at over the last 10 years and the features that have come out such as Autonomous driving, adaptive cruise control, touch screens, lane keeping aids, and most notably hybrid and electric technology! Right now the rate of development in car technology is rapid and being able to take advantage of the constant improvements not only is nice but also ensures you have the newest safety features to protect you and your family!