Your initial inclination might be to equate a lease to a finance/purchase as a one-to-one comparison. It's normal, and it's what we have been trained to do from years of buying and selling cars.
Purchases and leases are not equals.
Embrace the Structure
Leasing is a service inside of an advanced financing mechanism. Its distinctive feature "lower monthly payments" frequently eclipse its real function: the ability to financially protect the client. Purchasing contracts do not contain such safeguards.
Lower Monthly Payments - Lease payments are generally 16 to 45% less expensive than finance payments, and in those rare instances when they are the same as finance payments, the protection that the lease program offers makes it an invaluable tool.
Short Commitments - Contracts range from 2 to 3 years
No Buying and Selling - Selling a car is an inconvenient task buyers eventually have to deal with and most try to avoid at all costs. It’s not uncommon for clients to ask if they can trade in their current cars on a lease, the answer is yes, they can. Their inquiry is for one of 3 reasons.
Continuous Warranties - the only way to protect yourself from experiencing any repair costs, is to stay in a new car with a bumper to bumper warranty. Next to lower monthly payments, continuous factory warranties are the most often stated reason persons opt for new car leasing.
No Negative Equity - Unlike 60-month conventional finance contracts, or 36-month balloon open end lease contracts where negative equity is the norm, it’s impossible to have negative equity in a closed lease.
Assumable - Since the lease company retains ownership the contract can be moved from one client to another with relative ease.
Not Classified as Asset – Why important: When applying for grants or financial assistance of any kind, a lease will not effect your application since the vehicle is not in your name or owned by you. Closed-end lease payments do not appear on your monthly obligation list. Bank financing and open-end balloon note financing do, thus limiting your borrowing ability for other needs.
– Cars in Israel depreciate rapidly and erratically, there is no sure
thing when it comes to projecting your depreciation costs except within a lease
contract. See our blog on planned obsolescence. This is even more relevant as the new generation of EV's (electric vehicles) are coming online.
Easy qualification – Even new immigrants can be approved for a lease more easily than a finance. This is because of the absence of lending money; instead an asset that is owned by someone else is provided for you to use as your own for a designated period.
Conforms to Modern Ownership Patterns – fits like a glove matching the national average of automobile ownership turnover.
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