Time to consider the benefits of leasing
When the time comes to purchase a new vehicle, buyers have two options. Well actually three, as they can either lease or finance their new model, or buy it outright. That said, one of the options, leasing, is not necessarily understood by all.
It is understandable that not everyone understands the intricacies of leasing a vehicle. After all, the process can be complex, and there is a lot of information to process. In short, leasing a vehicle means that you will have possession of it of a certain predetermined number of months, and that you are only paying for those months.
In other words, you are paying for a percentage of the total price of the vehicle, and therefore you do not own it outright. On the other hand, it usually ends up being the most affordable option, from a monthly-payment point of view at least.
As an example, let us imagine that you are leasing a vehicle for three years and that that vehicle costs 20 000 $ (we will put an easy number here) everything included. The lease has a residual of 45 %. Residual value is a figure you will come across often as you search for a vehicle to lease. The residual value is the percentage of the vehicle that will be left unpaid at the end of the lease. So, back to our example, you are leasing a 20 000$ vehicle with a residual of 45 percent. That means that during the three years that you own the vehicle, you are paying only for 11 000$ (55 percent of the vehicle). Your monthly payment is therefore calculated on 11 000$ plus the interest rate charged by the manufacturer.
At the end of the lease, you will have a choice. You can pay the residual value and buy the vehicle outright, or give it back to the dealer and buy or lease another car. There are several advantages of leasing a vehicle, the first of which, as mentioned previously, is the cost.
Again, you are only paying for a specific portion of the vehicle, not the total price. So, it stands to reason that the monthly payment will be less.
Another advantage to leasing is that you are generally protected by the manufacturer’s warranty for the total duration of your ownership period. Mazda’s new unlimited mileage warranty provides protection for the powertrain for a period of five years, and bumper-to-bumper protection for three years. Therefore, if you lease your vehicle for three years, you will be protected for the entire duration of the lease while if you lease for four or five years, you are protected against damage to the powertrain for the period of your lease.
Also, for business owners, there are fiscal advantages to leasing. It would be wise to consult with your financial or taxation specialist, but as a general rule of thumb you can deduct more expenses on your vehicle when leasing.
Before deciding on whether to lease your finance your next Mazda, take the time to understand your needs. If you like to change cars often, do not like to have to overly worry about repair costs, do not want a high monthly payment, and own a business, leasing might just be right for you.