Although leasing now accounts for almost one-third of the new-car market, many customers assume the process is either too complicated, has too many drawbacks, or that they simply won’t qualify for a lease agreement. Since a lease allows you to drive the latest Hyundai without taking out a loan or paying a large lump sum, it’s worth familiarizing yourself with current lease terms and the advantages they offer.
An auto lease is a type of financing that essentially allows you to “rent” a vehicle from the dealer for a certain number of miles and length of time. In a typical lease agreement, you make monthly payments on the vehicle and at the end of the term, you either buy out the lease and keep the car or return it to the dealership.
Monthly lease payments are generally lower than auto loan payments because you’re covering the cost of the Hyundai’s depreciation as well as a rental fee, taxes, expected mileage, and other charges instead of the total cost of the vehicle.
There are several advantages to leasing a new Hyundai instead of buying one:
First off, you’ll enjoy lower monthly payments, which can help ease your financial burden. Not only that, but you can even opt for a more luxurious vehicle than you could otherwise afford, putting your dream car within your financial means.
Most lease agreements last around three years, which is roughly the same length of time as a new-car warranty. This means that most repairs are covered during your lease, which helps eliminate any fears around unexpected repair costs.
When you lease a car for business purposes, you can maximize your tax deductions and enjoy more write-offs than with an auto loan. That’s because the Internal Revenue Service allows you to deduct both the monthly financing costs and depreciation of leased vehicles on your taxes. Just keep in mind that write-offs for luxury vehicles are more limited.
When you opt to lease, you get a brand-new car every time your lease agreement is up. Imagine having the latest automotive technology every three years or so. This means that your navigation systems, driver-assist features, safety systems, and infotainment options will never feel outdated.
If you’ve ever tried to sell your used car, you know how stressful it can be. Do you trade it in at the dealership or post an ad online? How do you handle an individual buyer who wants to haggle? Where do you even find the time to show potential buyers your car?
With a leased vehicle, you never have to worry about any of that because you simply return the car to the dealership. At the end of your lease term, simply pay any end-of-lease fees such as additional mileage or abnormal wear and you’re good to go. The process couldn’t be simpler.
Yes. Dealers typically only lease to “well-qualified” customers or those with strong credit. On average, lessees have an average credit score of 724. Scores above 700 are usually considered good enough for lease agreements, but the final decision rests with the dealer.
Remember, lease-payment histories show up on credit reports, so even though you haven’t financed a vehicle, missing lease payments will still negatively affect your credit. Your credit can also be impacted if you end your lease early. That’s because paying off a lease before the end of the term comes with stiff penalties, and the account is reported as closed even if you’ve made the necessary payments.
On the plus side, leasing can help you build credit with regular, on-time payments throughout the entire life of the lease agreement.
Regardless, you’ll want to be well prepared before applying for a lease. Check your credit and work on building your credit score so you can qualify for the best terms.
There are a few common leasing errors that can end up costing you, especially if you’re a first-time lessee unfamiliar with the process.
Just because you’re leasing a Hyundai and not buying one doesn’t mean you can’t negotiate the price. Negotiating the amount of the lease (capitalized cost) can lower your payments or reduce the money owed at signing. You can also negotiate dealer’s fees, the value of your trade-in, the mileage cap, and other add-ons.
It’s easier to budget monthly expenses based on your take-home pay, but knowing what your lease payments will be isn’t enough. Make sure you enter a lease agreement understanding the total cost of the lease over the entire life of the agreement. This means adding every monthly payment, the amount due at signing, and all extra fees. You may discover that the terms aren’t as great as you think.
It’s essential to know how much you drive when you lease a new car. Mileage is one of the aspects negotiated in a lease agreement, and you’ll end up paying for underestimating. For example, a 36-month lease might allow 12,000 miles per year. Every mile over that will cost you $0.15. If you actually drive 13,500 every year, that’s an extra $225 per year — or almost $700 total — that you’ll have to pay at the end of the lease.
If you end up falling in love with your leased Hyundai, you might have the option to buy it. The best reason to buy a leased vehicle is if its actual residual value is lower at the end of the lease than was originally predicted. Just be sure to negotiate the purchase price and check to see if the same model is offered for less elsewhere.
Leasing your first Hyundai doesn’t have to be overwhelming. Talk to the experts at Hiley Hyundai West of Fort Worth to learn more about our leasing options.
