About Leasing
Why would I LEASE a vehicle instead of paying cash or financing?
LET'S BREAKDOWN VEHICLE LEASING
Many buyers don't pay full cash when purchasing a new car, so you’ll need choose an alternative way to finance it. Taking out a loan is an option but there is also leasing for financing a new vehicle.
The many advantages to leasing make it the right choice for people. When you lease, you can drive a new Nissan every few years, and usually for a lower monthly payment. Of course, despite its advantages, leasing isn’t right for everyone. Here are some benefits of leasing to help you make a well-informed decision.
LEASING 101
When choose to lease, you are driving that vehicle for a set amount of time, paying only for the intended value used, instead of financing for the full price. Most people opt to make monthly payments throughout the term of their lease or you can also make one payment for the full amount at the beginning of your lease. What's also great is at the end of your lease, you have the choice to return the vehicle and lease upgrade to a newer model, you can purchase your current vehicle, or return the vehicle and walk away.
WHY LEASE
- Get a bigger, better-equipped vehicle than what you could purchase for the same amount.
- Pay only for the portion of the car's life you use (which means a lower monthly payment).
- Receive tax benefits if used for business (depending on the lease, state, and tax laws).
- Invest any savings in appreciating assets like stocks, bonds, etc.
- Spread applicable sales tax across monthly payments (varies by state).
- Enjoy end-of-lease options: you can buy the car, lease another vehicle, or explore other choices.
- NEWER VEHICLES: Leasing gives you the opportunity to drive a new car every few years with the most advanced technology and safety features.
- LOWER PAYMENT: Monthly payments are usually lower, compared to a purchase because you are only paying for the portion of the car’s life that you use. Plus, many leases require little or no down payment. This frees up disposable funds for things like education, investments, savings or other priorities.
- FULL COVERAGE: The term of most lease contracts coincides with the factory warranty period so major repairs are typically covered.
- FLEXIBLE TERMS: The term is the length of time a car is leased, usually expressed in number of months (typically 24-36 months). There are several options to choose from when selecting your lease term. Lease terms tend to be shorter than traditional finance contracts.v
- SIMPLE TURN-IN PROCESS: At lease-end, you don’t have to worry about trading in or selling your vehicle. As long as you’ve fulfilled all of your lease obligations, you can simply turn in the vehicle.
LEARN SOME FINANCE-SPEAK
Make sure you know your stuff by reviewing these common leasing terms. Frequently used by lenders and dealerships, these key terms will give you a better understanding of the leasing process.
TO LEASE OR NOT TO LEASE. THAT IS THE QUESTION.
There’s no magic formula, but leasing could be right for you if you want to drive a new vehicle every few years, need a lower monthly payment, want more vehicle for your money, or would like to avoid trade-in and selling obligations involved with buying a car outright. We can help you choose the best fit for your particular situation.
- ACQUISITION FEE: Fee that the creditor (also called the lending company or lessor) charges at the beginning of the lease term to cover administrative costs.
- ADJUSTED CAP COST: The “adjusted” capitalized cost of the vehicle includes any trade allowance, down payment, incentives, and rebates that may have been applied to reduce the capitalized cost.
- ANNUAL PERCENTAGE RATE (APR): The cost of credit for one year expressed as a percentage.
- CAPITALIZED (CAP) COST: The negotiated price of the vehicle, plus any other items included in the lease and paid for over the life of the lease, such as a service contract.
- CAPITALIZED COST REDUCTION: Any sum that reduces the capitalized cost such as a down payment, trade-in, factory-to-dealer or lender incentives.
- CLOSED-END LEASE: The most common type of lease, a closed-end lease permits the lessee to return the vehicle at the end of the lease term with no liability, provided all other terms of the lease are met.
- CONTRACT MATURITY DATE: The date when your lease contract ends and your vehicle must be turned in.
- DISPOSITION (TURN-IN) FEE: A disposition (turn-in) fee, specified in the lease contract, payable at lease-end if the lessee does not purchase the vehicle.
- DOWN PAYMENT: An initial amount paid to reduce the amount financed.
- SINGLE-PAY LEASE: A lease where the lessee makes a single up-front payment instead of monthly installments. The residual value does not change, but the money factor is discounted, resulting in lower finance charges than with a traditional term lease.
- EXCESS WEAR AND USE: Everyday driving can result in wear and tear on a vehicle, like tire usage, exterior dents and dings or interior upholstery stains. At the end of a lease term, damage will be evaluated and there may be charges if it’s considered excessive. Useful tools like our online Lease-End Self-Assessment help make the turn-in process easy so you can evaluate wear and use ahead of time.
- GAP (GUARANTEED AUTO PROTECTION) COVERAGE: GAP is a unique coverage program that protects you from financial disaster in case your vehicle is stolen, or totaled. Here’s why: as your vehicle gets older, the actual cash value (ACV) declines, while your lease or loan balance may remain higher than what the insurance company will pay you. You are then liable for the difference between what the insurance company pays you and what you owe.
- LEASE-END: When the terms and conditions of a lease agreement are fulfilled in full. Termination of a lease can be done early, but may include a penalty
- MONEY FACTOR: The term money factor specifies a finance rate for a vehicle lease. It determines how much you’ll pay in finance charges each month during your lease. The higher the money factor, the higher your monthly payments and the more you’ll pay in total finance charges.
- PURCHASE OPTION: The option to purchase the leased vehicle, typically at the scheduled end of the lease term for a fixed price stated in the lease agreement.
- RESIDUAL VALUE: Estimated value of the vehicle at the time the lease agreement expires which is predetermined at lease inception.