Leasing vs. Buying a New Mitsubishi
At White Bear Mitsubishi, we are here to meet all the automotive needs of customers from Inver Grove Heights to St. Paul. We not only want to ensure they drive home in the perfect vehicle to meet their needs, but we also want to ensure they have secured the best financing solution for their new vehicle. For some customers, that will mean purchasing a new Eclipse, Outlander, or Mirage, while others will find that leasing a new Eclipse Cross or Mirage G4 is the best solution for their needs. However, to make that determination, it is essential to understand more about these two processes.
Understanding The Concept Of A Leased Vehicle
When you lease a new Mitsubishi from White Bear Mitsubishi, you are essentially using the vehicle for a specified amount of time at an agreed-upon price. Typically, a vehicle lease is for a term of two to four years, and a specified mileage limit applies per year. At the end of the lease period, you return the vehicle, which must be within the mileage limit specified in the lease agreement and in a reasonable condition, considering the vehicle’s age and the estimated wear and tear expected during the lease term. In some lease agreements, you have the option to purchase the car at the end of the lease for the residual value. In addition, if you terminate the lease before the end of the term, you return the vehicle and pay an added fee for the early end of the lease agreement.
Considering Your Monthly Car Payment
When you purchase a car, you are paying the full cost of the vehicle in equal monthly payments. While the payment will also include interest and any fees rolled into the loan, the amount is based on the full vehicle value. When you lease a car, you are only paying for part of the value or the amount of the depreciation of the vehicle while you are using it. While you would make payments over the course of four years to cover the full cost of a car you are buying, your lease payment only covers four years of use and depreciation of that same vehicle. According to Experian, the average new car lease payment is $600, while the average new car payment is $742.
Other Vehicle Expenses During Ownership
When purchasing a new car, most people make a significant down payment. This helps keep the monthly payment amount reasonable and decreases the interest paid over the life of the loan. When you lease a vehicle, you can typically take possession of it with little or no money down and still have a smaller monthly car payment. Over the course of the lease, you are still responsible for the maintenance and care of the car, which is critical to ensuring you maintain the terms of the loan and are not faced with added fees when returning the vehicle at the end of the lease. In addition, if you return a car with more mileage than was included in the lease agreement, you will pay per mile for the overage, which can be twenty-five cents per mile or more and add up quickly.
Buying Out A Lease
In some cases, a leased vehicle can be purchased by the lessee at the end of the term if they want to keep the car. They would need to pay the residual value of the vehicle, which is the original value of the car, less the amount they have paid for its use during the life of the lease. Most lease agreements state the residual amount in the case of a buyout. However, it is possible to negotiate that amount at the end of other leases. Buyouts are most common when the lessee has considerably exceeded the mileage allotment, making the purchase more reasonable than paying the overage fee.
Other Considerations
When you lease vehicles, you will typically be driving a new car every two or four years, which is vital to some people. They like the ability to pay only a portion of the vehicle’s value, then turn it in and get a new one. While you could sell a car you purchased after two years, there are no guarantees that you would get a reasonable amount for the vehicle as compared to the residual amount you know is offered by the lease agreement. But the downside to the lease is that you will never own a vehicle and not have a car payment.
If you are interested in exploring leases for various new Mitsubishi vehicles, please stop by White Bear Mitsubishi to discuss the terms of a lease and the possible residual value of the Mitsubishi models that you are considering.
