When is the right time to lease a new car?

Do you feel a little uneasy when a car dealer mentions leasing to you? Not so fast my friend. It's not the same as 20 or 10 or even 5 years ago. There can be drawbacks but in more than a majority of cases it is absolutely the right thing to do. Here are some thoughts that hopefully will clear the air on this issue when purchasing a new car. A lot of information on leasing is available on the web if you do some quick research. "I don't have a lot of money down and can't afford a big payment." It is often very affordable to drive a nice car and still keep a reasonable payment on a lease. Every vehicle and every manufacturer is different so it requires some research but it can save you a lot of money and you might be able to afford that dream car you want to drive.
Here are 10 things to consider when deciding.
1. "I hate the car buying process because I never know what my trade is worth." If you like to purchase a new car every two to four years and hate the hassle of dealing with a trade-in...you are a lease candidate. The end value of the vehicle you are buying is established and guaranteed up front in writing. When the lease matures you don't have to worry about your trade you just drop off the keys and get a new car.
2. "You always have to worry about the mileage on a lease." Yes mileage is a consideration but if you are consistent in the driving you do and have set a pattern over the years you can set up the proper mileage for the amount of driving you do. If you drive 1250 miles a month or 15,000 miles per year or less you are a lease candidate. There are penalties for going over allowed miles and you must be aware of these charges and how it may affect your personal situation. Even if you drive more miles than 15,000 a year you still may be a candidate but as the mileage increases the advantage decreases. If you are a high mileage driver you may want to consider a late model certified preowned vehicle with a high mileage factory warranty included. If you are a low mileage driver leasing has even more advantages because you only pay for what you use!
3. "I get tired of my cars and want another car now." If you keep financing and trading your vehicle and find yourself constantly "upside-down" (you owe a lender more than your trade is worth) and the problem gets worse...you are a lease candidate! People get into a poor situation by rolling negative equity into a new or preowned vehicle finance. It will take the full term of a 48-60 month finance to get out from under all the negative value. A lease term will be much shorter and by the end of the lease there is no longer any negative equity and you can start over with a clean slate.
4. "How long do I have to keep the car I am leasing and can I get out early?" If you are comfortable for two to three years with keeping the vehicle you are leasing...you are a lease candidate. Many people lease luxury cars because the payment is more attractive and you can get more car for the payment dollar. The financing term is usually much shorter than a retail finance (48-60 or even 72 month term) but since you are not paying fully to the bottom line to own the vehicle it is harder to trade out early.
5. Leasing is a financing option that lets you pay for the portion of a vehicle you expect to use over a specified term, plus a rent charge, taxes and fees. For example: you might want a $40,000 vehicle. And that vehicle might be worth about $22,000 at the end of your lease (residual value). If you purchase the vehicle using traditional financing, your monthly payments will be based on the entire $40,000 value of the vehicle, plus a finance charge, and you will own the vehicle at the end of your financing term. However, if you lease the same vehicle, your monthly payments will be based on the amount of the vehicle you expect to "use up" over the lease term, plus a rent charge, taxes and fees. This value ($18,000 in our example) is the difference between the original cost ($40,000) and the estimated value at lease end ($22,000). With leasing, you can get affordable monthly payments, a new vehicle more often, more vehicle for the money, and no resale or trade-in hassles.
6. "What's the difference in payment on the same car?" Compare the payments on a retail finance vs. a lease payment. As an example the BOSE Edition CTS Cadillac is offered now at $299 per month for 39 months with $3000 due out of pocket at lease signing plus tax, tag and the dealer fee. In calculating a good credit finance on the same car and the same amount due at signing the payment would be $1007 for 36 months, $788 for 48 months or $657 for 60 months. Your commitment in time is less and the payment is obviously less.
7. I trade my vehicle before the warranty coverage is over? Your warranty coverage is exactly the same whether you lease or purchase. Ask your Cadillac Dealer for limited warranty details. Is extra mechanical coverage available? Yes. A protection plan can be designed to provide a wide range of time/mileage coverages. For added convenience, an affordable vehicle maintenance plan, the cost of which can be built right into your lease payment.
8. What if the lease vehicle is stolen or totaled in an accident?
You're protected. GM SmartLease includes gap protection at no extra cost to you. It guarantees that if your vehicle is stolen and not recovered, or totaled in an accident and there is an insurance settlement, you are responsible for only the insurance deductible plus any unpaid fees, taxes, and amounts due.
9. "I don't own the car at the end." That is correct but you also have not paid the money necessary to own it. Keep in mind, with leasing you do not own the vehicle, you return it to your dealer at lease end unless you choose to exercise the purchase option as defined in your lease agreement. And let's think about what you do own if you finance the vehicle for 4 or 5 years. You have tied up your capital into something that is now out or close to being out of warranty and will cost more and more to maintain. After 5 years the vehicle is worth less than you think it is. Also you have tied up capital that you could keep, spend or make money on that is now tied in a depreciating asset. Like about 90% of the market after three to four years you're looking at all the new models on the street and being advertised and wishing you could be driving that new stylish car.
10. "I don't understand how a lease works." Many people don't but it is important to understand the contract and what is involved. Make an appointment to speak to a business finance manager at the dealer and any reputable dealer will be happy to sit down with you and fully explain the lease contract and the programs they offer before you even begin to go through the process of buying or leasing a car.

Buy a Cadillac in Tampa

This is a blog for people interested in buying a Cadillac or any vehicle. It is designed as a forum to retrieve information and discuss Cadillacs and vehicle purchases. Ed Morse Cadillac Tampa is part of dealer group that has been in business for over 50 years in the Florida market.