Why Lease a New or Used Car?  At Centennial Toyota's "Toyota Lease Specials Las Vegas" this is a question that many people want to know the answer to.

We all know that for business purposes leasing is pretty much the way to go. Our Commercial Fleet Las Vegas Department provides TRAC Leases all of the time to Local Las Vegas Businesses.  But what about those of us who do general driving?

Here are some popular reasons to lease:
You get more car for the money
Lower monthly payment
Vehicle is always covered under warranty
Prefer to drive a new car more often
Don't like selling or trading your used car
No down payments
Lower sales tax (in most states)
 
Compare Lease vs Buy Payments

These are all very good reasons to consider leasing, but let's take a look at some you may not have thought of.  See if this  sounds familiar?

You finance a car for 60 months and, for whatever reason, in 36 months you are ready for something else. At first, you think maybe you can sell your car until you realize you owe more than it's worth. So it's off to the dealer to try and work a trade and you end up burying all that negative equity into the next deal. And the cycle continues and seems to never end!  As a matter of fact, if you are IN a purchased vehicle making payments right now, it may be better for you to come and Lease a New Fuel Effient Toyota at Centennial Toyota's "Toyota Lease Specials Las Vegas".

A lot of people have good intentions of paying off their car loan and keeping the car at least for the duration of the loan. If you actually do this, just go here and get your best purchase price.

However, most people end up trying to get out of their loan early because they want a different car. Or they decide they want a lower payment so they refinance their current loan.

If you are like most people, you will ALWAYS have a car payment. This gets to my final answer:

If you always have a car payment, you should absolutely consider leasing.  As you know, those of us in the car business know how to get the best deal.  I mean, we are in the business right?  We ALL Lease our New Cars!!

So it's a common dilemma: lease versus buy — to lease or buy a car — which is better? Everyone who has ever considered leasing has had this question cross their mind.

The answer is – it depends. It's not possible to simply say that one is always better than the other because the answer depends on the specifics of each individual situation.

Leases and purchase loans are simply two different methods of automobile financing. One finances the use of a vehicle; the other finances the purchase of a vehicle. Each has its own benefits and drawbacks.

When making a 'lease or buy' decision you must look not only at financial comparisons but also at your own personal priorities — what's important to you.

Is having a new vehicle every two or three years with no major repair risks more important than long-term cost? Or are long term cost savings more important than lower monthly payments? Is having some ownership in your vehicle more important than low up-front costs and no down payment? Is it important to you to pay off your vehicle and be debt-free for a while, even if it means higher monthly payments for the first few years?  Do you ever really own your vehicle?

So we find out that making a lease-or-buy decision is not quite cut and dry. There are some things you need to consider. Let's take a look at some of these things now.

First, it's important to understand that buying and leasing are fundamentally different, not just two versions of the same thing.

When you buy, you pay for the entire cost of a vehicle, regardless of how many miles you drive it. You typically make a down payment, pay sales taxes in cash or roll them into your loan, and pay an interest rate determined by your loan company, based on your credit history. You make your first payment a month after you sign your contract. Later, you may decide to sell or trade the vehicle for its depreciated resale value.

Toyota Lease Specials Las Vegas provides you the LOWEST  lease payment where you pay for only a portion of a vehicle's cost, which is the part that you "use up" during the time you're driving it. Toyota Lease Specails Las Vegas gives you the option of not making a down payment(upon credit approval), you pay sales tax only on your monthly payments (in most states), and you pay a financial rate, called money factor, that is similar to the interest on a loan. You may also be required to pay fees and possibly a security deposit that you don't pay when you buy. You make your first payment at the time you sign your contract — for the month ahead. At lease-end, you may either return the vehicle, or purchase it for its depreciated resale value.

So lets look at a Toyota Lease Specials Las Vegas lease vs a buy example 

As an example lease from Toyota Lease Specials Las Vegas, if you lease a $20,000 car that will have, say, an estimated resale value of $13,000 after 24 months, you pay for the $7000 difference (this is called depreciation), plus finance charges, plus possible fees.

When you buy, you pay the entire $20,000, plus finance charges, plus possible fees.

This is fundamentally why leasing offers significantly lower monthly payments than buying.

How are lease and loan payments different?

Lease payments are made up of two parts: a depreciation charge and a finance charge. The depreciation part of each monthly payment compensates the leasing company for the portion of the vehicle's value that is lost during your lease. The finance part is interest on the money the lease company has tied up in the car while you're driving it. In effect, you are borrowing the money that the lease company used to buy the car from the dealer. You repay part of that money in monthly payments, and repay the remainder when you either buy or return the vehicle at lease-end.
 
Loan payments also have two parts: a principal charge and a finance charge, similar to lease payments. The principal pays off the full vehicle purchase price, while the finance charge is loan interest.

However, since all vehicles depreciate in value by the same amount regardless of whether they are leased or purchased, part of the principal charge of each loan payment can be considered as a depreciation charge, just like with leasing — it's money you never get back, even if you sell the vehicle in the future. It's lost money for which you'll have nothing to show.

The remainder of each loan principal payment goes toward equity. It's what remains of your car's original value at the end of the loan after depreciation has taken its toll. Equity is resale value. It's what you get back if you sell the vehicle. The longer you own and drive a vehicle, the less equity you have. At some point in time, after the wheels have fallen off and the engine is worn out, the only equity left is scrap value. You never get back the amount you've paid for your vehicle.

Buy versus lease - savings account or no savings account

So, buying a car with a loan is essentially like putting money into a declining-value savings account — you never get out as much as you put in. A portion of every payment you make is lost to depreciation and finance charges. What you have "to show" for your investment when your loan is paid off is only the part that is left over after depreciation and interest. A terrible investment by any measure. But cars are not usually purchased as investments, are they?
 
Leasing, then, is similar to buying, but without the equity "savings account." You only pay for what you use and you don't put anything extra into "savings." It's true that you'll own nothing at the end of a lease; you'll have nothing "to show" for the money you've put into it. But... what you don't own is the same part of the car's original value — the depreciated part — that a buyer too doesn't own at the end of his loan. Again, a car's value depreciates the same amount whether it is leased or purchased. That money is gone forever, lease or buy.

With "Toyota Lease Specials Las Vegas", you may have the option of putting your monthly payment savings into more productive investments, such as mutual funds or stocks that have the possibility of increasing in value. In fact, many experts encourage this practice as one of the benefits of leasing, though most people will typically find other uses for the money they save by leasing — such as paying the mortgage or buying groceries.

To summarize, leasing typically does not build equity, while buying does. The reason that a buyer has equity at the end of his loan is that he purchases that equity by making higher monthly payments. Part of each payment funds the equity. Leasing - lower payments, no equity. Buying - higher payments, partial equity.

Leasing can be a little more complicated

Because leasing is somewhat more complicated; with residuals, money factors, etc.; it shouldn't be undertaken quite as casually as you might with a simple loan. There are more opportunities to misunderstand and make mistakes. Therefore, leasing requires that you be more careful and more informed.

This is precisely the reason we've provided this Lease Guide and our optional Lease Kit — to make leasing as easy as possible for you.
 
Just a comment on lease-to-buy plans

Some folks lease with the intention of buying their vehicle at the end of the lease, or before the end of the lease. This is nearly always more expensive than simply buying outright. However, you may have a good reason for this tactic. Just be aware that it costs you more in the long term.

One other thing - GAP coverage

Most car leases have automatic built-in gap coverage, while car purchase loans almost always do not. Gap coverage, or gap insurance, pays the difference between what you owe on your loan or lease, and what your vehicle is actually worth if your vehicle is stolen or destroyed.

Why is gap insurance important? Because it's very common, in these days of long term loans and leases, rolled-over and refinanced loans, and little or no down payment, to be "upside down" — to owe more on your loan or lease than your car is actually worth. This can mean you'll still owe hundreds or thousands of dollars to the finance company even after your insurance has paid off for a car that has been totaled or stolen. This turns out to be a shocking surprise for most people caught in this unfortunate situation.

So, nearly all leases have gap protection, but most loans do not. You're better protected with a lease, unless you purchase the gap insurance separately at extra cost for the loan — if you can find somewhere to buy it.
 
Lease or Buy? Which is Better?
 
So, is it better to lease, or to buy? As with any question of this type, there are always pros and cons, pluses and minuses, advantages and disadvantages.

Lease vs Loan

Leasing always has lower payments. Does this mean leasing is always better? Not necessarily. Payment is not the only factor that should influence your decision.

Let's simplify the answers and summarize them here:

1. The short-term monthly cost of leasing is ALWAYS SIGNIFICANTLY LESS than the cost of buying.

For the same car, same price, same term, and same down payment, monthly lease payments will always be 30%-60% lower than loan payments. This is still true even when compared to 0% or low-interest loans.

 2. The medium-term cost of leasing is ABOUT THE SAME as the cost of buying, assuming the buyer sells/trades his vehicle at loan-end and the leaser returns her vehicle at lease-end.

The overall cost of leasing compared to buying, over the same lease/loan term, is approximately the same, assuming the buyer sells the vehicle at the end of the loan. Comparisons sometimes show buying to cost a little less than leasing due to fewer fees, lower total finance costs, and the assumption that a purchased vehicle will return full market value if it is sold or traded at the end of the loan (often a bad assumption: Think of all the people who have purchased domestic Cars, Trucks, and SUV's in the past few years!  They are stuck like Chuck with those vehicles now!). However, when the benefits of wisely investing monthly lease savings are considered, and sales tax savings (in most states), the net cost of leasing can easily be less than buying.

 3. The long-term cost of leasing CAN cost more than the cost of buying, but usually only if the buyer keeps his or her vehicle after loan-end.

 If a buyer keeps his car after the loan has been paid off and drives it for many more years, the cost is spread over a longer term. It doesn't take rocket science to figure out that the cost of buying one car and driving it for ten years is less expensive than leasing or buying five different cars over the same period. Therefore, leasing can be more expensive than long-term buying. The real problem with the argument against keeping a car a long time is that hardly anyone does that.  Further, after the factory warranty runs out on a car you purchase, YOU have to foot the bill for any and all repairs.  That can quickly turn into what is known as the "unseen car payment."  Recent Government Studies show that after 48 months of opperation, the average American spends $312 a month to maintain and repair their automobile.  So the reality is that leasing is usually cheaper than convetional finance for automotive aquisition.

So, which is better, lease or buy?

It depends on what's most important to you. All of us have different lifestyles and priorities — in cars and in finances. Car lease-versus-buy decisions must be made with your own lifestyle and priority attributes in mind. What's right for one person can be totally wrong for another.

LEASE - If you enjoy driving a new car every two or three years, want lower monthly payments, like having a car that has the latest safety features and is always under warranty, don't like trading and selling used cars, don't care about building ownership equity, have a stable predictable lifestyle, drive an average number of miles, and properly maintain your cars, then you should lease.