In recent years, leasing has become a highly popular method of acquiring vehicles. Studies have found that almost half of all North American vehicle sales to consumers were paid for with lease financing.
Leasing is simply paying for the use of a vehicle, rather than actually paying for the vehicle itself in a conventional sense. The bottom line is that your lease payments cover the cost of the vehicle's depreciation over the length of the term of the lease, instead of the vehicle's actual purchase price (plus tax). You (the "lessee") maintain and enjoy the use of the vehicle during the lease, but when the lease is over you can purchase the vehicle for the pre-determined "residual value" (sometimes called the "buy out") or we will work with you in determining the other options available to you. In most cases, Affinity Auto clients have retained equity in their leased vehicles at the end of their leases (Please consult us for details).
Here are some of the many compelling reasons many people chose to lease their vehicles:
Leasing is not a magical solution to buying a car. There are, however, distinct financial benefits that make it a better solution than buying under many circumstances. When you purchase a vehicle, you pay the agreed to selling price, plus the applicable taxes and levies that apply to new cars. In British Columbia, the total tax rate for luxury cars can be as high as 16%. Whether you opt to pay cash or use purchase financing, you are required to pay all of the tax, up front. This is especially unattractive if you are borrowing the funds because you are, in effect, borrowing money and paying interest on it, in order to pay taxes. Leasing solves this.
By contrast, when you lease a $50,000 vehicle, for example, you only make payments on the difference between the $50,000 purchase price and the agreed residual value of, for example, $26,000. In other words, you make payments on $24,000 over the term of the lease instead of the $50,000, plus taxes, in a loan.
In all cases, the monthly lease payment on the same vehicle will be cheaper than the monthly loan payment, assuming the length of each is identical. If you desire a lower monthly payment as compared with conventional financing, leasing makes a very attractive alternative.
Many people miss out on great opportunities because they eliminate the option of leasing too quickly. Leasing can be a compelling option for a wide variety of reasons. In recent years, in addition to thousands of individuals, many major corporations and governments agencies have started leasing their vehicles due to the benefits.
Leasing is a frequently used but often misunderstood concept. Click here to view a comprehensive explanation of many of the concepts and commonly used terms relating to leasing.
* Please consult a qualified accountant or professional advisor for an explanation of any tax advantages that you may qualify for.