Category: Lease vs. Buy

Advantages of a New Car Lease Vs. a Used Car Lease

Deciding on whether you should lease a used car or lease a new car requires you to consider the advantages of both options to determine what is the best for you. We gathered the advantages of both options so you will make the best decision for you. 

Advantages of Leasing a New Car

New car leasing is beneficial for those who want the latest model vehicle with the most up to date trends, without the high price tag or a long-term commitment.

• By leasing a new car you can choose the car you want with a lower monthly payment.
• New lease car deals usually come with maintenance provided and a warranty covered under your leasing contract. 
• By leasing a new vehicle you can trade out your vehicle every few years after your leasing contract ends. You can trade in the leased car for a new car lease deal and not worry about the maintenance, depreciation, or re-selling of the car.

Advantages of Leasing a Used Car

Used car leasing can be more cost-effective if you are looking for affordable payments and low commitment. Car dealers usually struggle to sell new car lease returns in excellent shape and have low mileage. Here are some advantages of used car leasing.

• Used car lease deals have lower monthly payments. Since the value of the car decreases the most during the first two years after it is sold, you  pay significantly less at signing and on monthly payments.
• When a car is three-years-old they are also more likely to need maintenance repairs. Therefore, you should have a maintenance agreement in your used car leasing contract that covers the cost.   
• You have the freedom of returning your used car lease at any time. Similar to a new car leasing, if you didn’t go over your mileage or cause any damage to the vehicle, you have the freedom to walk away with a different car when your lease is up.
• Another major benefit of leasing a used car is, used car leases are cheaper to insure. Used car leases are usually three years old, because of the age of the vehicle, your insurance is typically lower than it would be on a new car lease.

The truth is, many people do not know the real financial benefits of leasing a vehicle and ultimately resort to financing a car instead. D&M Auto Leasing has narrowed down the top reasons why leasing a car makes the most financial sense in 2020.  

Reason #1- Lower Monthly Expenses

Overall, monthly expenses are typically lower when leasing a car versus financing. The monthly payments on a new lease is often lower than traditional financing. With a car lease, you are only responsible for paying a portion of the cars value rather than obligated to pay for the entire value. In most cases, well-equipped vehicle lease specials are less expensive than financing a lesser equipped new model or pre-owned vehicles. Used car leases are especially attractive for those looking for exceptional value.

Reason #2- Little to No Repair Cost

The manufacturer warranty can cover a fair amount of maintenance and repair expenses during the term of the lease. Unlike financing a vehicle, the manufacturer’s warranty is typically the same length as the lease term. The warranty outlines the coverage responsibility on the manufacturer. This added benefit with new car leases can lower or eliminate wear certain unexpected repair and maintenance costs.

Reason #3- Get a New Car at Lease End

No more worrying about researching the vehicle value and looking for a seller for your existing car. At the end of your lease term, take your car back to the leaseholder and trade in your vehicle for something different. A financial benefit with car leasing is the ability to drive the latest vehicle at a lower payment and shorter lease term.  

Reason #4- Tax Benefits of Leasing a New Car 

Business owners and employees may qualify for a tax advantage if they are using their car lease for business purposes. Monthly payments, maintenance cost, and mileage may count towards your tax deduction.  D&M Auto Leasing offers various special lease programs for businesses. 

Reason #5- Low Mileage Vehicles

Low mileage drivers experience a financial benefit with leasing as well as high mileage drivers. Low mileage drivers have lower wear and tear and greater trade flexibility. High mileage drivers depreciate a vehicle more quickly and are exposed to the extra liability that comes with heavier use. A lease limits this liability and manages the trade cycle by properly depreciating the vehicle. Call D&M Leasing to find out about low mileage lease savings, high mileage lease management and ask about our Mileage Forgiveness Program!

Summary

The combination of leasing benefits above is why car leasing makes more financial sense overall. With a car lease, you are opting for lower monthly payments, manageable maintenance and car related expenses. At D&M Auto Leasing we want to help you get a car lease that meets your needs and fits your budget. We are here to listen to your needs and help get you the latest model of your favorite vehicle. 

Fill out the quote form below and let D&M Auto Leasing get you into your next car!

With both traditional financing and leasing, the client makes monthly payments to a financial institution for a specified period of time. Choosing between a lease and a traditional purchase is an important decision.

What is the main difference?

When purchasing a vehicle, the client takes financial responsibility for the entire cost of the transaction and the vehicle’s full depreciation. Retail installment contracts are written on longer terms than leasing with typical ranges from 60-84 months. At the end of a retail installment contract, the client receives title and “ownership” at that point. Leases are written on shorter terms on average and because the client is only paying for the part of the vehicle that he or she is using, the monthly depreciation. This results in lower consumer payments on leases than traditional financing.

Is leasing for me or should I buy?

To make an informed decision, a consumer should consider many factors including his or her average trading patterns, driving habits, and monthly budget to name a few. If a client has kept their previous vehicle for 6 years or longer and intends to stay with the same pattern, a purchase makes more sense especially if they are able to pay the vehicle off quickly eliminating extra bank interest. For clients that trade every 3 to 5 years, leases make very good sense because you are only paying for that specific vehicle’s depreciation as you go, thereby offering lower payments than buying and reducing your exposure to negative equity or ‘being upside down’ at trade time.

What are the benefits of leasing a car?

For clients that keep 3-5 year trade cycles, leasing offers lower monthly payments and less exposure to negative equity when you trade because the lease agreement has matched the client’s lifestyle and needs better than a long term finance contract. Closed-ended leases offer guaranteed residuals thereby adding another layer of protection for clients. With a consumer-friendly closed-ended lease, the value of the vehicle at the end of the term is guaranteed for the consumer by the funder, no matter what the actual market value is at the time.  This is an extremely important feature of a closed-ended lease as wrecking your vehicle, body style changes, economic recessions, consumer sentiment, etc. all can have a major impact on a vehicle’s future worth. Lease customers don’t have this concern. If their vehicle is worth more than the guaranteed residual at the end, the client keeps the equity and uses it as he or she sees fit. If the vehicle’s actual market value is less than the residual at the end of the term, the client can exercise his or her right to have the funder take the vehicle back at the pre-guaranteed value thus eliminating the customer’s exposure to negative equity. Some leases( including the D&M EZ Lease), but not all, have GAP insurance included in the payments. GAP offers protection when a client’s vehicle is deemed a total loss by the insurance company, but the amount owed to the bank exceeds the vehicle’s market value.

If you’re interested in leasing a new car, start by filling out our online quote form. Our D&M Auto Leasing representatives will contact you and help you find the exact car lease you’re looking for, down to the color and features. Also, when you lease with D&M, our EZ Lease gives you the option to make no down payment with no payments for 60 days. Your D&M representative will assist you in navigating through the process. We are appreciative of the opportunity to work with you and aim to provide world-class service.

Leasing at D&M has been on the uptick because the average new car price has risen rapidly, far outpacing personal income and wage increases. Therefore, most car-buying customers have begun to stretch out their finances in order to afford a highly unreasonable car payment.

Average New Car Price

According to an analyst at Kelley Blue Book, the average new car price in the United States was $37,577 in December 2018, which was 1.3% up from last year. Not only has the average price of a new car gone up, but the interest rates have increased while the incentives remained flat year-over-year.

Reason For High Costs 

Two main reasons the average transaction prices of new vehicles increased in late 2018 were tax reform and low rates of unemployment.

The sales mix of cars dropping to 31 percent also played a role in rising prices of new vehicles. As well as more automakers like Ford discontinuing their car nameplates in favor of pricier SUVs and trucks.

Costly Auto Loan

Unfortunately, even if a customer decides to apply for a car loan to defray the high cost, the average car loan is now $30,030. So what ends up happening is the car buyer borrows a lot of money to buy a depreciating asset and has to pay it back over an average term of 68 months. Not to mention the average auto loan payment per month is $503, for a total payment of $34,204, which is $3,902 more than the borrowed amount.

More and more consumers are realizing that signing long-term finance contracts is a very expensive way to pay for their cars. D&M professionals solve this problem with the EZ Lease, the most consumer-friendly lease on the market. D&M agents not only offer clients exclusive access to the EZ Lease, but we also have lease proprietary software that allows them to ‘manage client leases’ from start to finish in an attempt to provide world-class service.

More and more business owners are asking whether they should buy or lease the vehicles they need. Business and consumer leasing vary greatly. You’ll need all the right facts. We’ve put together a list of reasons why you should lease your next commercial lease vehicle with us.

Customizable Lease

• When you lease a vehicle for your business at D&M we listen and structure a leasing program that works for your key business needs. Whether executive vehicles, work trucks, service vehicles or heavy duty, you conserve working capital by spreading lease payments over the useful life of the asset. All business leases at D&M are individually and professionally managed to your needs with quarterly reviews to assess the effectiveness of the overall plan.

Latest Technology

• One of the best perks of getting a commercial lease at D&M is the ability to upgrade your vehicles more frequently. Keeping up with the latest technology, fuel efficiency, and safety features may seem like a luxury. We find that businesses save money and increase employee morale, productivity, and safety with a more cost-effective leasing solution.

Tax Advantages

• At D&M, you are able to pay for the lease with pre-tax dollars rather than after-tax profits to save you money. Also, you can deduct not only your payments but also your business driving costs if your lease vehicles are driven 50% or more for business purposes.

Flexibility

• Businesses need to be flexible. Leasing allows businesses to only pay for a vehicle’s serviceable life. Replacing them before maintenance costs or heavy depreciation eat up working capital is called Optimum Replacement Cycling. This is the secret to saving money through leasing. As new needs arise lease lines are extended to accommodate greater needs. All leases are managed according to the lowest Total Cost of Ownership, (TCO), principal.

 Increase Company Value

• Leasing is an operating expense and as such does not appear as a liability on your finical statement. Leasing for business carries obvious benefits to the balance sheet for future needs or opportunities.

On top that, Our D&M representatives work directly with our clients to guide them through our process with ease and efficiency. We will analyze your current fleet with no obligation and make helpful recommendations. From there you choose the program that makes most sense for your needs. Fill out our online quote form and one of our representatives will contact you!