|Total Lease Payment||8,994.10|
|Total Cost Buy After Lease||22,774.10|
|If Purchase Under the Same Condition|
|Total Loan Payment||22,208.01|
In the new car market, leasing account for about one-third of the market share. According to Edmunds, the average price of a new car is around $37,000, and the average car loan payment is $560 a month for 60 months after a $6,000 down payment in 2019.
New cars are expensive, and leasing is the cheapest way to get into a new car. A car lease lets you drive a new vehicle without paying a large sum of cash or taking out a car loan to buy it. To lease a car, you simply make a small down payment, usually less than the typical 20% when you buy, followed by monthly payments for the term of the lease. When the term expires, you return the car.
When a consumer leases a new vehicle, the consumer is getting into a special deal with an auto dealer. Instead of buying the entire vehicle, the lease buyer pays for any depreciation incurred over the entire cost of a lease (normally two or three years), plus any fees and costs incurred within the leasing period.
There are two key auto financing concepts in auto leasing - capitalized cost and residual value.
Basically capitalized cost is the buy outright price for the vehicle you want to lease. You should negotiate the capitalized cost just as if you were buying it. Residual value is the likely value of the vehicle at the end of the lease and is almost never up for bargaining. Just like you guess it, the amount you pay for a leased auto represents the cap cost minus the residual value, with interest and fees added into the price.
We know that it can be difficult deciding on a vehicle, as well as picking which financing option better suits your needs. There is no one-size-fits-all solution and each option has distinct pros and cons.
Leasing a car has some drawbacks. Among them:
Leasing is more beneficial than buying when you: