Buy vs. Lease

When is leasing for you?

Do you drive fewer than 25,000 miles per year and prefer ....

• A lower monthly payment?
• A safer, more reliable car all the time, and not just when your car is new?
• A car under warranty with fewer repair bills?
• Investing your cash elsewhere instead of tying it up in a depreciating asset?
• Sales tax only on your monthly payment instead of the whole car?
• Owing nothing at lease end with the option to buy your car at a wholesale price?

..... then leasing is a better way to pay for your new car.  Almost all of us at Anchor lease our cars.   Ask for details.

Here are some examples of people who Should Not lease a car

If you buy your cars and keep them forever, don't lease. You have discovered the most economically advantageous way to own a car.  However, while this can be a good financial decision, it may not be a very good safety decision because you're going to be spending a lot of time in a car that's obsolete in terms of safety technology.  

Here are some leasing benefits for everybody else:

• A lower monthly payment
• You're always driving a safer, more reliable car less than three years old
• A car protected by warranty with fewer repair bills
• Investing cash elsewhere instead of tying it up in a depreciating asset
• Rhode Island sales tax only on the monthly payment instead of the whole car (May vary in other states)
• Owing nothing at lease end with the option to buy your car at a per-determined wholesale price
• Excess miles are cheap to buy on a lease (about 10 cents per mile up front)compared to the depreciation on your financed car (more like 25 cents per mile)
• Gap insurance is free and included when you lease a Nissan. If a leased car is totaled in a theft or accident, there's no risk of owing the bank more
  

Why don't more people lease vehicles?

The Biggest objection most people have to leasing is that they don't understand it.  People tend to fear and avoid things they don't understand, especially when they are in an uncomfortable environment(Such as a dealership).  Here's a quick contrast example between financing and leasing a $20,000 Nissan for a
 60 - month loan and a 36-month lease:

Loan $20,000 Bank collects all $20,000 from you over 60 months plus interest Monthly Payment  $380 When you get a $20,000 loan, the bank pays us $20,000 for your car and keeps your title until you pay off the entire $20,000 plus interest.

Lease $20,000 Bank collects $8,000 from you over 36 months plus interest $12,000 (residual) Monthly Payment $260 When you lease, the bank also pays us $20,000 and keeps the title.   What's the difference?  With a loan, the bank wants back 100% of the $8,000 plus interest (the difference between $20,000 and the residual of $12,000.  The "residual" is the per-determined value of the lease vehicle after 36 months)

 

Common Misconceptions about leasing

• "With a lease, I don't own anything" When you take out a loan, do you get a title? Not until you pay off the whole amount . So you don't really "own" it until it's paid off.  A lease is the same way.  The bank retains the title and if you want to own the car you just pay off the lease.
• "With a loan, I own the car at the end." True. But not much of car. A five year (or older) old car with higher miles.  If the lease saves you $120 a month for the term of a 60 month loan, that's $7200 that you have in your pocket instead of your car.  (and that's assuming you don't make some additional interest on it by investing it or putting it in the bank.)
• "It's better to own than rent."  The reason you should buy a house instead of rent is because the house usually appreciates in value.  But cars depreciate. And they have significant costs.  Most people who lease never pay for brakes or tires, for example, because they don't keep the car long enough to wear them out.  If you finance your car for five years, you'll certainly need tires and brakes at least once, plus other repairs.
•  "The dealer makes more money when I lease" This is true, but not in the way that you would think.  Whether you buy or lease you pay the same price for the car.   However, we do sell more cars overall because research shows that lease customers are more likely to become customers for life (and why wouldn't they? They're always driving a newer, safer, more reliable car for a smaller payment.
  
• " I can't trade the car in before the lease ends." Actually, you can.  After driving your car for 30 months, don't you think it's less expensive to get out of a 36 month lease that's almost up rather than a 60 month loan that's only half paid? approximately 40% if people owe more on their loan than their cars are worth -- Not only do they bot have equity, they are actually "upside down"
• "I don't want a new car every few years.  I like to buy new, pay the car off, and have the car without payments."  While you may not have a payment in those out years, there are still costs.  You'll be spending more in repairs to keep an older car on the road, older cars use more gas and pollute the environment more, have fewer safety features than modern cars, and are more likely to break down and leave you in a dangerous situation.
• "I drive too many miles." Cars depreciate about 25 cents per mile.  Yet with a lease, you can buy additional mile upfront for only 10 cents per mile.  At the end, if you go over, they're only 15cents.  People who put a lot of miles on financed cars usually end up owing more than they are worth - not only do you not own your car , it owns your!
• "I had a bad experience with a lease because I drove over the miles and I had to write a big check at the end." If you had financed the car instead, don't you think that piling on extra miles would have substantially reduced the value of the car at trade in time? Cars depreciate about 25 cents per mile but they only cost 15 cents on a lease if you go over.  If you buy them up front, they're only 10 cents!  So if you're concerned about driving a lot of miles, we'll build them into the lease for you.   Either way, you're better off putting too many miles on somebody else's car!
• "I had a bad experience with a lease because I had to pay for damage at the end."  People who trade in financed cars with damage have to pay too - because they get less at trade - in time .  You don't get a bill in the mail for it.  Furthermore, our experience with lease returns is that the Nissan inspectors are pretty lenient about minor damage because they want you to get another lease.