Families in general can have a lot on their plates financially. So having to replace a car can mean stretching funds to beyond your limit.
I had a similar experience after my car accident in September where receiving the value of my old car when it was written off meant we had to find more money to buy a newer car that we just didn’t have.
So, what’s a family to do? They could opt to enquire about a cheap used car and pay for it upfront with cash, or they can get a car lease.
Car leasing for young families
Getting a lease for a car makes a lot of sense from a financial standpoint. For one thing, it gives you one less thing to worry about.
What’s more, you can save a lot on your expenses with a lease. Some of the advantages include:
Lower monthly fees
Buying a car means either paying for it all in cash or taking out a loan which you will be obligated to pay over a set amount of years.
When you take on a lease, you will merely be renting the car for your family. And as is with any lease contract, you are bound to it depending on the agreement stated in the contract.
Another reason why leasing has become quite popular is the tax relief it brings. A lot of times, you can pay lower taxes on a leased car compared to when you buy a car. This keeps money in your pockets that you can use for other things like food, and mortgage.
Maintenance and Warranty Coverage
Leasing a car is synonymous to renting it. That means it’s not yours, but more like you’re borrowing it from the leasing company. This means that the monthly payments you make can some times include the warranty and the maintenance for the vehicle. But be careful, because there are certain limitations to what the company covers and it may highly depend on how many miles you have driven the car in a yearly period
Ability to trade up to newer models
Once your lease is up, you are eligible for either a renewal where you can get a new car, or you are given an option to buy the vehicle for keeps.
When you think the responsibility of owning a car is a bit too much for you and your family to handle, car leasing is the way to go. It’s easy to afford the monthly fees, and the money you save can go towards saving up for a new car.
Once the lease is up, you can return the car and put the down payment on the new car. But be aware that although a contract offers a lot of promise in savings, you could end up with a lot more spent than you were expecting.
Just watch yourself and be mindful of the miles your car is accumulating to avoid an extra headache with the leasing company. If you can do that, then you’re good to go.
Leased Cars and Gap Insurance
On the road, even if you consider yourself to be the most defensive driver in the world, you can still find yourself in a road accident you never wished to be a part of. Like our recent car accident during a routine drive to the shops. Luckily, no one was to badly hurt. But it did put into perspective the importance of having insurance for your car; leased or not.
When you buy a brand-new car from the dealership, Sometimes it comes with insurance. And your monthly payment for your car finance in this instance would also cover the fee for the insurance too.
Leasing companies often get a master insurance plan for their fleet of vehicles. And once you drive away with one of their cars for the next few years, you are expected to pay the gap insurance. Keep in mind that this could pay the difference between the lease’s balance if the vehicle gets into an accident and is considered a total loss.
Another thing to keep in mind when talking about car lease insurance is the collision and comprehensive coverage.
Collision coverage helps to cover any damage to the car from accidents involving another vehicle or object, while comprehensive coverage includes loss or damage that are not caused by another vehicle or object. This includes deer collisions, theft, and damage caused by fire or any other natural disasters.
Before you take on the lease, remember to talk to your car dealer about what kind of insurance you can expect from them and if you are required to add anything on top of the ones that they already offer. It is always better to be safe than sorry.
Although on this occasion for us we have not gone down the car leasing front we have decided that it is the best option for Ollie’s car as he drives a 40 miles round trip a day for work whereas I work from home and only use my car 3-4 times a week.
Roll on May when we will be checking out the leasing options for his car!