Reasons To Consider Leasing Your Next Vehicle Near Kahului
Leasing a new car is a great option for drivers for several reasons:
- You get the best years of life out of the car (from brand-new to 3 or 4 years old)
- Your car is covered by a Bumper-to-Bumper Warranty for the entirety of the lease term
- You have the option to walk away at the end of the lease
- The tax advantages to leasing are typically greater than purchasing
Another reason to lease is that it gives you an “out” without any negative repercussions.
Here’s a great example of this: A friend of ours who got rear-ended in her leased Jetta, two years into her 3-year lease. Her insurance company fixed the car, and she continued to drive it for another year. At the end of the lease, she was able to turn the car in WITH NO NEGATIVE PENALTY. Compared to if she had financed or purchased that car and then decided to sell it, it would have brought a significantly lower value because of the accident.
There’s also no interest on a lease. Instead, there’s a “money factor” that acts as a multiplier that is evenly distributed across each lease payment. This is in contrast to financing interest that is front-loaded through amortization. In other words, this means you are paying down your “principal” balance sooner and faster than on a traditional financing purchase.
Volkswagen is known for having industry-leading lease payments and incentives. They do this through LOW Money Factors and Rebates on nearly every model.
After our sales associates go through training to understand how leasing works, over half of them typically lease a new Volkswagen. If that isn’t a tell-tale sign that leasing makes sense, we don’t know what is!
Common Misconceptions Of Reasons Not To Lease
Have you heard any of the following reasons that you shouldn’t lease a car? These reasons may apply to some drivers, but for many motorists, leasing a new car makes a lot of sense.
- “You don’t own anything” – Most financial Advisers wouldn’t recommend owning anything that goes DOWN in value.
- “You HAVE to get a new car every three years” – The average buying cycle for most Americans is 3-5 years, leasing ALLOWS you to get a new car every three years with no negative equity.
We don’t recommend leasing to those who drive more than 15,000 miles per year. This is why leasing isn’t as popular on the mainland. Still, in Hawaii, especially Maui, leasing works great for most people’s lifestyles and provides a budget-friendly option to drive a safe, reliable, new car.
However, we had a CPA lease a car from us who drove more than 15,000 miles per year. She said the tax incentives from leasing — even with the mileage overage at the end of the lease — made more sense than purchasing. So she simply set aside a few extra dollars a month to cover the mileage over at the end of her lease. As you can see, there are exceptions to every rule or recommendation!
Your Options At The End Of A Lease
At the end of the lease you have 3 options:
- Buy the car
- Sell/trade the car
- Turn-in to the manufacturer
Here’s how we recommend choosing the right decision at the end of a lease:
- The first thing you have to decide is if you love and want to keep the car or upgrade or replace it. If you love it and want to keep it, then you can buy it for your residual. Plus, the manufacturer typically has special financing options available if you’ve made on-time payments throughout the lease.
- If you decide you want to upgrade or replace the car, the next thing you want to do near the end of your lease is to determine if the car is worth more or less than your Residual.
- The easiest way to do this is bring the car by the dealership so we can give you the current live market value.
- If your car is worth MORE than your residual, then you will want to sell/trade your car and take advantage of positive equity.
- If your car is worth LESS than your residual, then you will want to turn the car back into the manufacturer, and you get to walk away without any negative equity.
Residual is the amount that you are paying the balance down to, based on a determined percentage at the beginning of the lease by the manufacturer. The residual is based on how many miles per year you select (such as 7,500, 10,000, 12,000 or 15,000 per year). One example is a $30,000 car with a 55% Residual, or a $16,500 balance.
Explore Your Lease Options In Kihei, HI, Today
KarMart Superstore of Maui is your source for new Mitsubishi and Volkswagen cars, crossovers and SUVs in the Kihei, HI, area. Our auto superstore serving Kiohei and surrounding areas boasts competitive lease offers that could help you upgrade to a new VW or Mitsubishi with highly affordable monthly lease payments.
So what are you waiting for? Don’t hesitate to contact our sales and finance specialists today. Or, just stop by our auto dealership at your convenience and let us go over the array of new car lease options available to you!