Sometimes It Makes More Sense To Lease Cars
In the modern world some of the most predictable expenses are associated with the ownership and operation of an automobile. Monthly payments and incessant gas purchases conspire to make the family vehicle one of the most resource draining things around. For some people, the decision to lease cars is more sound than financing them.
The essential difference lies in the way in which the worth of the vehicle is calculated. In a normal purchasing transaction, the auto’s value is determined and the price is set accordingly. Even though the vehicle will depreciate over its lifetime, you will still pay for the total value of the vehicle at the time of purchase. This is obviously not the most cost effective way to pay for something that is not going to retain its current value.
This is the essential difference between leasing and purchasing. With a purchased vehicle, you can still find yourself making monthly payments even though the vehicle itself has depreciated past the amount you have already paid. This means that you will be continuing to pay off the financing even though the automobile is no longer worth what you agreed to pay.
This problem is very elegantly solved by leasing arrangements. Basically, the dealership will calculate your amount owing based on a simple formula. They know how much the automobile is currently worth, and you know how long you want to keep it. By consulting tables and doing math, the dealer will determine the anticipated depreciated value at the end of the time frame, and this amount is subtracted from the present cost.
At the end of the contract, the vehicle is returned to the place you got it. In essence, you have rented the auto for a set time, returned it in slightly worse condition than you borrowed it, and have paid for the privilege. This can be a more preferable course of action for many people.
If you want to drive around in a new auto every few years, this may be an arrangement you might like. Certainly both small and large companies sometimes discover that a vehicle fleet is easier to manage financially if they are obtained in this way.
The next time you are looking to buy a new auto, perhaps you might like to see if it makes more sense for someone in your situation to lease cars. For many people there is no particular advantage, but for others there are considerable benefits to this method of vehicle acquisition. If this approach fits you, it may be a good idea.
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