Car leasing sometimes gets bad press, and several myths surround the process that makes it sound more complicated than it really is. Let’s take a look at six of the most common myths about leasing a vehicle.
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Leasing Is the Same as Renting
Many people think that leasing a car is the same as renting, but that’s not true. When you rent a car, you can end the rental at any time, swap cars, and you don’t need a credit check. Leasing is a finance deal that is more like a loan. You sign a legal contract to take a specific vehicle for a fixed period of time. You can’t change the car or end the lease early.
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Leasing Is a Way To Get a New Car With Poor Credit
As leasing is a finance agreement, you need a good credit score, sometimes a better one that for other types of loans. A new car is a valuable asset, and the lease finance company wants to be pretty sure it’ll get paid. You may still be approved if your credit score isn’t the best, but you will probably pay higher monthly fees.
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A Vehicle Lease Doesn’t Affect Your Credit Score
That’s not true either. As we said above, leasing a car is like taking out a loan. As with any other borrowing, it will show up on credit bureau reports as an outstanding debt. If you miss any payments or default on the lease, it will have a negative effect on your credit score.
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Leasing Gives You Tax Benefits
This is true, although mainly for businesses that can deduct vehicle leasing payments as an expense. However, in most states, individuals only have to pay sales tax on the monthly payments and not on the price of the car.
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Maintenance and Insurance Are Covered Within a Lease
This is not usually the case. You will generally have to pay for insurance, servicing, repairs, and gas as if you owned the car. Of course, if you lease a brand-new vehicle, it will be covered under the manufacturer’s warranty for any major faults. Some carmakers provide free maintenance for a limited time, and you may be able to negotiate inclusive servicing with the dealership.
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Small Damages Will Incur Big Costs
The lease contract you sign will be pretty specific about what damage you will be charged for. The lease finance company recognizes that some wear and tear will occur over the period you have the car.
However, if when you turn in your car at the end of the lease term, it is apparent that the vehicle has been abused and has more than average wear and tear, you are likely to be charged for the extra damage. Simply treat the car as if it’s your pride and joy.
When you are ready to buy your new car, head over to Bommarito Chevrolet South County. Not only can you find your perfect car, but we can also advise on the best financing deal to suit your circumstances.
Image via Chevrolet.
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