When you are looking to acquire a high-end automobile like a Mercedes Benz, the options are that you can purchase it, or lease it. Both have various benefits and drawbacks and the best decision relies on some critical factors that require much thought and consideration.
For a growing number of premium car owners however, when they look at the details, leasing is the better option. Let’s examine what many who look to lease a Mercedes Benz or similar premium car, have discovered about the benefits of leasing:
Smaller Down Payment
When you lease there is a set drive off amount that includes a small down payment which is typically less than 10% of the value of the car. This down payment amount is used to lower the car’s monthly payments.
When you purchase, the loan company will often demand 20% of the price of the car to be paid up front in order to secure the loan. On a premium car, this would mean a considerably large amount due. So you save out of pocket money when you lease. Alternatively, you can always check for a title loan online before signing.
Pay Less Monthly
Undoubtedly the largest benefit one receives is the lower monthly payments required when you lease a car. Lease owners will generally pay 40% less to lease than own, and in some cases there are even better deals available. This is because you are only paying for depreciation of the car during the time you are driving it. A lease payment is calculated based on the difference between its sale price and the residual value of the car when it is returned.
At the end of the term, you have to give the car back and providing the value of the car is equal to the pre-estimated book value, there is nothing else to pay. This is why the monthly payments on a lease will never come close to what you pay when you purchase. For a car like a Mercedes, savings on payments can be dramatic.
No Repair Costs
Every premium car lease will come with a full factory warranty for the entire car. With this being the case, you do not have to be concerned about costs for repairs if the car is not functioning. It will also include the cost of fluids and even brakes during the lease. Today as car loan terms have been stretched to sometimes 7 years, an owner runs the risk of significant repair costs as car warranties expire within that time.
Special Benefits for Business Owners
You can save valuable VAT money if you are a business owner and you lease the car for business. VAT registered businesses can work schemes that allow them to reclaim 50% of VAT.
Things to Remember When You Lease
Remember when you lease you need to pay attention to your miles because every lease has a limit on the miles you can drive. When you exceed that number, you will have to pay additional costs.
Additionally, make sure the car you lease has a history of meeting the projected residual amount. If that number comes in less than the dealer’s projections, you will have to pay the difference.
With its many upsides and few downsides, leasing a luxury car these days is no doubt the better option.