Does Leasing Make You Avoid Depreciation?

Depreciation can play an enormous role when it comes to selecting a new car. If you decide to purchase a vehicle, you will need to take into account the fact that it will start to immediately decrease in value the moment that you drive it away from the dealership. This can be as much as 40% in just the first 3 years and this means that if/when you look to sell the automobile on, you will suffer a significant loss.

How to Beat Depreciation

One way that motorists in the market for a new automobile can sidestep depreciation is to lease the vehicle instead of purchasing it. This involves having the keys to a brand new car with full manufacturer’s warranty and making monthly payments for a determined period. Once you reach the end of the contract, you simply hand the keys back and walk away. You do not own the automobile, so therefore you do not have to worry about selling it on and depreciation. Instead, you can take out a lease on an even newer model.

Mileage Limits

It is easy to see why many people are now leasing as it enables you to drive brand new automobiles every few years without the worry about depreciation, but it is important to be aware of every aspect of leasing. One important factor is that a contract will always come with a mileage limit for the agreement. If you were to go over this limit, you incur a fine. This will usually be confirmed as an annual limit and is often negotiable when you use companies like Car4Leasing, but it will not be checked until you return the automobile at the end of the lease.

Avoiding Charges

If you like to regularly take road trips then you may want to re-consider, but you could also carefully work out your mileage and opt for walking, cycling or public transportation where possible to allow yourself more mileage. The amount you pay if you exceed the limit will depend on the dealership and type of vehicle, but it will usually be charged per mile and be a small amount and could, therefore, be negligible. These charges are not viewed as penalties, but instead compensation for the lower lease-end residual value (it will be worth less as it has travelled further).

Leasing is a great way to avoid depreciation and many motorists like the idea of driving a brand new car every few years, but it is important to be aware of the mileage limits and how you could end up paying for part of the depreciation if you do not manage your miles.

~ by velofinds on September 1, 2009.

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