You have to add a leased car to your auto insurance policy. You might have to make a down payment. And you’ll definitely have to make monthly payments on a leased car. Leasing a new car sounds pretty similar to buying a new car with an auto loan, doesn’t it? In a way, yes, but there are some important differences between the two. myAutoloan is here to explain!
What is leasing a car?
When you lease a car, you do not own it. You do not have any ownership interest in the vehicle. You get to drive a (typically) new car for a few years and you only pay for the depreciation that occurs while you have the car, plus interest.
Leasing a car is a little like renting a car, but for a really long time. Think years, not a weekend getaway. You make payments for the use of the car over a certain time period, then return the car at the end of the period. Most car leases are for 2-3 years. When your car lease is up, you have the option to buy the leased car or give it back to the dealer and walk away.
Why do people lease cars instead of buy cars?
As you can see, buying a car outright isn’t the only way to get a new set of wheels.
According to data from Statista, 28.28 percent of the new cars in the U.S. were on lease in the fourth quarter of 2017. After they weigh the cars, many drivers choose to lease instead of buy. One option isn’t necessary better than the other. In the end, it all depends on your preferences.
Pros to car leasing
- You can make a lower down payment
- You could get a lower monthly car payment than buying
- You can get the latest safety features and technology
- You can drive a new car every few years
- You have lower repair and upkeep costs since the car is newer and you’re under the factory warranty
- From month-to-month, it can be less expensive than buying
Cons to car leasing
- You can’t modify the car as you please
- You have to keep your annual mileage under a certain amount, typically 12,000 miles
- If you drive hard and fast, you could face expensive wear and tear charges at the end of your lease
- It’s expensive to terminate a lease early
- Lease contracts can be confusing and filled with confusing lingo
- You can’t sell the car or return it whenever you want
Can I lease a car?
Yes, you probably can! You will likely need to make a small down payment, less than the usual 20% of a car’s value if you were buying, and then make monthly payments per the terms of your lease.
Your monthly payments are likely negotiable. Search for carmakers’ “lease specials” and check out dealership websites to learn about special lease offers. You don’t need a perfect score in order to lease a car, but you might need a good one in order to qualify for a lower interest rate. Most low interest and “no down payment” lease incentives are reserved for drivers with admirable credit scores. A credit score below the mid-700s may not qualify.
Can I buy my leased car?
Yes, you can buy a leased car with help from myAutoloan! We can connect you with a competitive lease buyout loan that gives you the freedom to buy your currently leased car. Use the loan to buy your car at the end or before the end of your lease—it’s up to you. Get started by filling out our fast, secure, and cost-free application. You’ll be matched with up to four loan offers from real, verified lenders who are ready to do business with you.
If you’d rather buy a car, we’re here for you, too. Get ready to buy a car and compare up to four auto loan offers in minutes on myAutoloan.