Leasing Benefits

Leasing Benefit No. 1: Driving a New Car

Leasing lets consumers always have a new or late-model car in the driveway. This has some obvious benefits, including the ability to keep up with the industry's hottest cars and trends. This may not be the most prudent reason, but leasing is often a lifestyle or business choice, rather than a financial one.

These same drivers benefit from having the latest safety technology. Plus, newer cars have the latest creature comforts; technology advances faster than the length of a typical car-loan term.

Another benefit of driving a late-model car is fewer repair bills. If you're leasing to avoid future haggling with your mechanic, make sure the lease term is shorter than or equal to the car's bumper-to-bumper warranty.

Leasing Benefit No. 2: Cash Flow

Leases are attractive to many car buyers because they can get more car for a lower monthly payment. How is that possible? Lessees only pay for the depreciation on the car, not the entire vehicle. In effect, they're renting the car for the length of the lease.

Leasing can reduce your initial cash outlay. This allows for a more intelligent use of cash rather than putting it toward the questionable investment of car ownership since cars are depreciating assets.

There are other financial advantages in leasing. If you use your car for your job, leasing payments can be written off as a business expense on your tax returns. Additionally, lease obligations don't show up as debt on a credit report, which may be important to companies that buy multiple cars for business use.

Leasing Benefit No. 3: Subvented Lease Deals

Automakers offer incentives on leasing as well as big cash-back offers to those who buy. Such leasing incentives are called lease subvention.

Subvention is when an automaker subsidizes a consumer in an effort to move slow-selling cars. Automakers offer subvention deals because they're in the business of putting cars on the street. That philosophy of "move units now, pay later" is directly to the consumer's benefit, experts say.

© Cars.com 6/6/13
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