Right now, the average new car costs $50,000 (Car & Driver).  That means a 72 month loan with Denver taxes, at an upper 5% rate is about $915 per month.  In this scenario, you would be paying about $4,600 in taxes and have a total amount financed of about $66,000 on this $50,000 car.  Keep in mind, your rate could be higher.

 

A lease saves you money in almost every aspect.  I see manufacturers are incentivizing their lease programs more than financing programs.  It is true you can find 0% or 1.9% financing on some cars, but the overall majority of cars do not have these programs.

Leasing is like renting a car to where you don’t really own it, but you are paying for a percentage of the car, not the entire amount.  You are taxed less on leases because you are taxed on the monthly payment amount, not the entire cost.  Lease rates are typically lower than finance rates.  This was not the case during peak Covid, but the programs are coming back down to normal.  The lease term is shorter than financing, allowing you more flexibility to get out of it sooner.  Most lease programs provide GAP insurance (not Mazda or Toyota for whatever reason) to cover you if your car is ever totalled.  In most circumstances, you are under full factory warranty during the lease, in case car problems do pop up.

 

To sum up, leases offer:

• Lower Purchase Cost

• Lower Payments

• Saves on Taxes

• Lower Rates

• Shorter Terms

• GAP Insurance

• Factory Warranty

 

This allows you to get a higher priced car that you need, at lower costs in every way.

 

So what’s the catch?  I need to make sure we do the correct mileage so we don’t get charged for going over.  During the course of ownership, you need to stay on top of fixing wearable items like tires, windshield, excessive damage, and keeping it clean.  IF we turn in your lease, you will get billed for these kinds of items.  BUT if we trade out of the lease, we avoid the mileage and damage fees.  First payment is due at signing, you will have to fork some money up front.  I will circle back when the lease is approaching turn in, so I can trade you out.  In most circumstances, we can apply any equity towards your next lease or purchase.

 

Cars are upgrading more frequently which means the market value drops faster.  You can have a 5 year old car, but it can be 2 body styles old.  That 72 month loan never puts you in an equity position unless you put a huge chunk of money down.  But then again, why put so much down when a lease can achieve a better payment anyway?

 

Understand, this isn’t for EVERY case on a lease.  I am confident to say it does apply to the majority of people.  Some models don’t lease well at the end of their program, but the popular names usually do.