Looking to lease a new minivan in Colorado? Buying versus leasing includes making decisions on driving and buying habits and finding the best residual values and price.
Leasing Versus Buying
You can find a lot of information on leasing versus buying on the Internet, but often the information you get is confusing. If you want to lease a new minivan in Colorado, how do you know if leasing is right for you? Consider the following tips to help you make a good decision on leasing:
- With leasing you don't own the vehicle. When you lease a minivan you do so for a period of time with a leasing company and then you have the option to turn the vehicle back in at the end of the lease and walk away, buy it, or some leasing companies will let you finance the leased vehicle for a specific period. If you buy a minivan, once the loan is paid in full, you own the vehicle.
- Up front costs may be necessary whether you lease or buy. In leasing, you are usually required to make the first month's car payment, a security deposit, taxes, registration, and any dealer fees. The leasing company may also ask for a down payment. When buying a new minivan, you are not responsible for the first month's payment until approximately thirty days after you sign the loan contract. The taxes, registration, and dealer's fees can be rolled into your loan. There is no security deposit and it is up to the finance company whether you are required to make a cash down payment.
- Monthly payments are usually lower when you lease a new minivan because you are only making payments on the depreciated value of the minivan during the lease. With a conventional loan, your monthly payments include the entire purchase price of the vehicle.
- The payments on the depreciated value of the minivan are where most people get confused. For example, if you compare minivans and decide to lease a Honda Odyssey, let's look at what you're paying for each month:
|Less Residual Value||$10,000|
|Amount Of Lease||$15,000|
The amount that determines your monthly lease payment is the $15,000 or depreciated value less the residual value plus monthly taxes, registration, and fees. The $10,000 is the residual value and is what you can purchase the vehicle for at the end of the lease term as long as you have met all lease requirements.
- Leasing Requirements - These usually include early termination where you may be subject to fees set by the finance company or mileage charges. When you lease a new minivan, most lease companies set the amount of miles you are allowed to drive during the term of the lease, usually between 12,000 and 15,000 miles. If you had a three-year lease and were allowed to drive 15,000 per year, that means you must have 15,000 miles or under on the odometer at time of turn in. If you go over the set mileage, your leasing contract will outline how much each of those additional miles will cost you at turn in time. How many miles you drive, or your driving habits should help you determine whether leasing is a choice for you.
- Wear and Tear These are items to consider when leasing a new minivan in Colorado. When you go the conventional loan route, even if you trade-in your vehicle before the end of the loan, the wear and tear on the vehicle helps with negotiating what your trade-in is worth. With leasing, some leasing companies have limits on wear and tear. For example, if you are a smoker and burn holes in the carpet or seating, it may be your responsibility at lease turn in time to pay to fix wear and tear items. Not all leasing companies consider wear and tear so it's best to ask.
How to Make the Right Decision
Here are a few tips to help you decide if leasing a new minivan is right for you:
- Driving Habits - If you drive in excess of 15,000 per year, skip leasing.
- Length of Ownership - If you normally get a new vehicle every two to three years and drive less than 15,000 miles per year, leasing is right for you.
- Available Leases - Take time to understand each manufacturer or leasing company's rules. Not all are the same. For example, one leasing company may offer zero due at signing but roll in your taxes, fees, and registration into your monthly payment, so you aren't really saving. In fact, in this instance, you may as well buy the vehicle. Other leasing companies have restrictions not mentioned here, so ask about each restriction if you decide to lease.
Summing Up Leasing a New Minivan in Colorado
If you want to lease a new minivan, almost every new car dealer in Colorado offers a leasing program. Leasing programs are outlined and offered by the manufacturer, so if you lease a Honda Odyssey, you will more than likely enter into a Honda lease. Before you enter into a lease, make sure you have a clear understanding of how it works and what it entails.