Common Myths About Car Leasing
Below there are some of the most common misunderstandings about car leasing. - Car leasing is a dealer scam In fact, leasing is a legitimate for...
Below there are some of the most common misunderstandings about car leasing.
- Car leasing is a dealer scam
In fact, leasing is a legitimate form of vehicle financing. It is not a dealer scam, even if dealers quite often benefit from the customers’ lack of knowledge about it. You have to understand that dealers do not traditionally make a lot of money from leasing unless they know that the customer does not know how to evaluate a deal. In fact, leasing has gotten a bad name from customers who have been involved into leasing as a way to lower monthly payments and then realized that here should have been some other considerations that the dealer did not disclose. The common reason why leasing causes some problems is that customers just do not know how leasing works as well as how to determine if leasing is the best option for them.
- Leasing is the same as renting
First of all, it is necessary to tell you that car leasing is not renting. Quite often vehicle leasing is confused with apartment leasing, which is actually renting. Car leasing is designed to pay for a car’s expected devaluation during the time it will be leased. You have to know that all cars decrease in value whether they are leased or bought. A bought new car loses its value, which is revealed when the owner tries to sell it, for example, two years later and could just cover about a half of the money spent. And there is nothing to show for the other half lost to devaluation. And the car leasing just pays for the lost 50% and no more. This is a reason why lease payments are about 50% lower than loan payments for the same car.
- Leasing is for businesses
Even if car leasing is for businesses, personal car leasing has some benefits to those who qualify. The main purpose of leasing for business is preservation of cash and for tax deductions which is the other advantage. Businesses have much more productive users for cash than sinking it into devaluating assets like vehicles. The same is true for people who could have money that they would rather not invest into cars or who do not have money and need a low cost way of financing their vehicles.
- In the case of car leasing you are not an owner of the leased car
This is true unless you decide to buy the car at the end of the lease. But, those who purchase with a loan do not own their cars till their loan has been completely paid. In addition, the value of a car at the end of the loan is reduced by the devaluation that it has suffered during the time the loan was being paid down. And the buyer no longer owns the part of the car that has been lost to devaluation, which is the same part that a leaser does not own.
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