When you’re in the market for a new Toyota, all of the deals and advertisements and all the different prices with different terms can get a little overwhelming. Buying a car seems mostly straight-forward, but what about leasing, is that the better option? And what do all the different prices mean? At Danville Toyota, we’re here to help you find the answers you’re looking for so that you feel confident in all your vehicle decisions.
First, the basics: what is leasing? Leasing a vehicle is similar to renting, you make monthly payments to use the vehicle for a certain timeframe - usually 2 to 3 years - and at the end of that term, you can either buy the vehicle or return it, and either lease another vehicle or buy one. The term of the lease refers to the length of the lease, typically in months. The most common type of lease is a closed-ended lease that does not require you to purchase the vehicle at the end of the lease or to pay any extra costs based on the value of the vehicle, although you may have the option to buy the vehicle if you wish.
So, how does it work, and why would you choose to lease? The main reason is that leasing a vehicle can result in much lower monthly payments than getting a loan to buy a vehicle. When you lease a vehicle, you are not paying for the entire cost of the vehicle over the term of the lease, you are paying for the difference between the purchase price and the projected value of the vehicle at the end of the lease term. In addition, you only pay taxes on that amount, instead of the full value of the vehicle. That means your monthly payments to lease a vehicle could be anywhere from 30% - 60% lower than if you chose to buy. And if you use your vehicle for your job, leasing payments can be written off as a business expense on your tax returns.
In addition to having a lower monthly payment, you usually have to pay less money upfront when leasing a vehicle. There may be some upfront fees that can be rolled into the monthly payment, but compare that to the 20% or more down payment that most dealers require to get a good loan rate.
Another money saver is the fact that, because lease terms are short, you usually are covered by the manufacturer’s warranty during the entirety of your lease term. This means that you don’t have to worry about major repair costs like you would with a vehicle you own. Plus, since most new Toyota vehicles come standard with ToyotaCare, much of your maintenance ends up being free as well.
Having to put little to no money down, drastically reduced monthly payments, and low maintenance and repair costs mean that you can probably lease a higher-end vehicle than you could afford to buy. There’s also the benefit of having the ability to trade it in every few years, meaning you stay up-to-date on the latest safety technology and interior comforts that the vehicle market has to offer.