Are There Any Benefits in Car Leasing?

Get Car Financing
Even with poor credit.

By

Content Manager

Bethany Hickey is is a Content Manager and Writer for Auto Credit Express, CarsDirect, and many other automotive blogs. She's a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. 


, Content Manager - July 20, 2021

If you’re the type of person that wants the latest and greatest vehicle every few years, becoming a repeat lessee may be for you. Here are some benefits that come with car leasing, and then some downsides to consider.

Why Drivers Often Choose Leasing

The biggest difference between leasing and financing is that leasing means you’re paying the leasing company for the vehicle’s loss of value during your lease term. Financing means paying for the selling price of the car.

Leasing is similar to “renting,” where you pay a leasing company to drive the car for typically around 24 to 36 months, or two to three years. Once your term is up and you’ve paid everything you owe, you return the vehicle to the dealership.

Leasing is popular with borrowers that want to drive a new car every few years, but don’t want to finance. Typically, brand new vehicles lose a lot of value in the first few years of ownership. This can make it hard to sell newer cars for a profit if you want to drive something new every couple of years. But with leasing, you don’t need to worry about selling the car when you want something else, because you're returning it at the end of the term, and can typically sign another lease without much hassle.

Many lessees are also payment shoppers. A payment shopper is someone who’s most concerned with how much they’re paying each month. Leasing typically has a lower monthly payment than financing, since it doesn’t involve repaying the entire value of the car.

Benefits of Leasing a Car

If you have good credit and enough income to qualify, leasing a vehicle can offer many benefits, including:

  • Lower monthly payments – Many lessees choose leasing because they tend to get a lower monthly payment for a brand new car lease than if they were to finance the same new car. Since you’re not paying for the vehicle’s entire value, only for its loss of value plus a money factor, leasing a car can be less expensive month to month.
  • Peace of mind – Leasing is almost exclusively for brand new cars, which also means manufacturer warranties are included. All new vehicles come off the line with a warranty that typically lasts for up to 60,000 miles or five years, whichever comes first. These warranties typically cover major repairs on the powertrain and can offer peace of mind for drivers that don’t want to shell out hundreds of dollars for major repairs during the lease term.
  • Technology advances quickly – Do you desire the latest safety and infotainment features? Vehicles seem to be advancing as quickly as smartphones these days, and leasing can offer you the next set of bells and whistles every couple of years.
  • Skip the sale – If you’re not someone that enjoys the thrill of haggling with a dealership, then leasing could be for you. When you’re ready to upgrade your vehicle, but you’re financing, you need to sell the car and pay off your loan to get out of the car - which could mean having to haggle on a buy price. But with leasing, you simply pay the leasing everything you owe and return the car without having to haggle. You don’t have to sell the leased car back to the dealership, because you’re just returning it.
  • You don’t drive a lot – If you’re not a heavy commuter, and don’t want to spend thousands upon thousands on a car you barely use, then leasing can be a good move. Leasing comes with mileage restrictions, typically around 12,000 to 15,000 miles a year. If you drive less than that and want a lower monthly payment on a new vehicle, then leasing may fit your lifestyle nicely.
  • You may not need a down payment – Down payments for a car lease are called cap cost reductions, and they’re not required with every lease deal. If you want a lower monthly payment, then putting money down can help, but may not be required to qualify for a lease if you have good credit.

If there are all these benefits to car leasing, then why doesn’t everyone do it? Well, there are downsides to leasing that may outweigh the benefits.

Flipside: Leasing Downsides

When you lease, you’re not buying the car as you would with an auto loan. Once you pay off a car loan, you own the vehicle completely and no longer have monthly payments. If you continue to lease year over year, then you always have a monthly car payment.

Another downside to leasing is the cost of auto insurance. Leasing is typically for new vehicles only, and newer cars tend to cost more to insure. Leasing companies may also require more coverage, since it’s their asset. You may also be required to purchase GAP insurance.

Aside from costing more long-term, bad credit borrowers may struggle to get approved for a lease. Most leasing companies require their lessees to have a good credit score, often above 660 or in the 700s. If you’re a new borrower, or one with negative marks on your credit reports, then you may find it tough to get approved for a lease.

Need a Car With Poor Credit?

Getting your hands on a car lease usually means having good credit and enough income to meet requirements. Even with a decent income, your credit score could be enough to knock you out of the race for a car lease. However, there are resources for bad credit borrowers in need of a vehicle, called subprime financing.

Subprime lenders are signed up with special finance dealerships, and they often assist borrowers in tough credit situations. If you’re in need of a car and your credit score is getting in the way, then look to CarsDirect. We’ve created a nationwide network of dealerships that assist bad credit borrowers. We’ll look for a dealer in your local area once you complete our free auto loan request form – there’s never a cost or obligation to get connected to a special finance dealership with us.

$1 Credit Report

Get your credit score now!
Get a copy of your most recent credit report too.

Get Your Report & Score

Auto Refinance

Refinance your car or truck now. Get a better interest rate and lower payment.

Refinance Your Car

Vehicle Warranty

Protect your vehicle and you could save thousands on auto repairs.

Get a Free Quote

Need a Car Loan?

It only takes a minute.

, Content Manager

Bethany Hickey is is a Content Manager and Writer for Auto Credit Express, CarsDirect, and many other automotive blogs. She's a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. 


Search New Cars by Lease Payment »

Explore estimated lease payments with the latest manufacturer discounts.

Loan approval is not guaranteed and is subject to credit application and approval of the lender. Individual loan terms may vary. Use of this website constitutes acceptance of CarsDirect.com's Terms of Use, Disclaimer, Privacy Policy, and Cookie Policy.

Privacy Policy|Do Not Sell My Personal Information|Terms of Use|Cookie Policy|Disclaimer|
COPYRIGHT 1999-2021 MH Sub I, LLC dba CarsDirect.com