Q:

What are the benefits of leasing a car?

A:

Quick Answer

When leasing a car, benefits include no applicable sales tax, little or no down payment, and the lessee can trade in the car every few years, as detailed by Consumer Reports. Other benefits exist but only apply under specific circumstances.

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Full Answer

People who are single, drive seldom, and have no pets or children get the greatest benefit from leasing, according to Consumer Reports. This is because the condition of the car must be maintained according to the lease terms, and families and pets can contribute significantly to a car's wear and tear.

Since most banks cap auto loans at a certain level, people seeking a particularly expensive car often choose to lease to avoid the costly down payment or payment outright, as reported by Investopedia. Business owners also enjoy advantages with leasing, provided that they use the vehicle exclusively for business purposes, according to Investopedia. This is because certain tax advantages apply to cars leased as a business expense.

While monthly payments can often be half of those of an auto loan, there are extra costs to leasing a car, according to Consumer Reports. Since a lease payment is lower than a loan payment and takes longer to pay off, the associated finance charge based on the car's value is always higher.

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