The new generation has come with its unique requirements, and adapting to change is inevitable. Today, demands and responsibilities are growing each day, and the auto business has become one of the most affected. There has been a heated debate over the years whether one should lease or buy a car outright. With much of the support leaning towards leasing, one can now qualify for 6 month car lease no deposit and own the car without having paid for it entirely.
Buying a car has its financial implications – although money is not the only factor which is looked at. An individual’s taste and lifestyle also greatly matter, on whether one should lease or buy a car. As it has been for a long time, people have been discouraged on leasing a car with some claiming that it is too expensive or one will not have the freedom of ‘owning’ the vehicle entirely. More than 20 percent of the cars on the roads now leases. Here are some benefits and a few drawbacks to leasing a vehicle.
6 Month Car Lease: Why Do People Get It?
A 6 month car lease is an unpopular option for many people. However, it is a growing trend, and more lease companies have diversified their options. But why would someone want to lease a car for that short period?
When you find yourself in a temporary situation such as; school, temporary employment, military deployment, etc., this might be the best option for you.
Others sign up for this short term car lease with the intention of buying it. A 6 month car lease will enable such people to test drive the car under no obligation before concluding whether it is what they are looking for. When you decide to go for this option, it will be wise of you to go through the leasing terms carefully.
Do your math and check whether it makes any financial sense of buying the car after the end of your lease period. Sometimes, you might be better off buying a used car instead of buying yours at the end of the lease agreement.
Advantages of a Car Leasing
If you plan on following this route, here are some benefits you stand to reap;
1. Lower monthly payments
When leasing a car, there will be monthly installments which are technically friendly to your finances. Little to no deposit will be required when you want to lease it. There will be no upfront tax requirements which you have to settle. You can find out more on how a $99 car lease no money down works as it will give you further insight. It should, however, be noted that there might be extra charges accrued during and after the end of the lease which we shall look at further below.
2. Fewer repair expenses
A 6 month car lease no deposit is very ideal, especially to someone who does not want to get hit with significant and unexpected repair bills. In most cases, you will still be covered by a manufacturer warranty, which will take away most of your repair concerns. In this regard, you will still be responsible for the regular maintenance and upkeep of the vehicle to ensure it is always in good shape. It is also your role to get the minimum insurance requirements as guided by the state.
3. Never having to sell the vehicle
If there is one significant disadvantage of owning a car is the process of having to sell it when the time comes. A ‘closed end’ lease agreement allows you to return the vehicle after the lease expires. After that, you will have the freedom of picking another car from the inventory or extending your initial lease agreement. You may also have the option to buy the vehicle fully at a pre-set price after the lease deal has expired.
4. Bad credit? No problem
Leasing companies are not as strict as sub-prime lenders. You can lease a car with bad credit and still have no higher premiums, or monthly installments remain the same. Car leasing companies do not have to go through your credit history before approving your request for a lease as they can take back their car whenever you fail to honor the payments. If you have poor credit, it is recommended that you first strive to make it better as there are other companies which might look at your credit history.
5. Driving a new car more often
When you lease a new car after short periods, you can comfortably get to be driving new models with the best and latest technology. That way you can get a taste the best car models which are in the market and fit your budget range.
Drawbacks of Leasing a Car
1. Limit on time and distance
The lease agreement will clearly state the time when you will be expected to return the car to the company. Should you take longer to return the vehicle or make prior communication, you will be penalized. Moreover, most leases also limit one on the distance, which is to be covered while on the contract. Most dealerships will allow you to go a maximum of 6,000 miles when getting a 6 month car lease no deposit. If you go past the set limits, you will be penalized even further. The downside to this is that you will be charged extra when you go past the set mileage but receive no credit when you return when you have ‘budgeted’ you travel distance and not reached the limit.
2. Liability for payment
Life is unpredictable, and you might find yourself in a financial predicament, making you unable to repay the installments on time. If you lose your job or your source of income, the car will be recovered and sold on auction. If the vehicle fetches an amount lower than what you owe on the lease agreement, you will be legally forced to pay the balance.
3. No sole ownership, but you will be responsible for all repair costs
This is probably one of the biggest challenges associated with leasing out a car instead of buying it outright. During your lease period, any repairs which the warranty does not cover will be your sole responsibility. This means the car will not be ‘your car’ as you cannot modify it or make any changes to how it was initially. You cannot add those spoilers you so much want, you cannot change the paint color, and if your kid or dog tears down any interior parts, you will take full responsibility.
4. You cannot claim the vehicle as an asset
Since this is still not your vehicle, you cannot claim it as an asset in a legal framework. This is because it is again, technically, an asset of the company which leased out to you.
5. It becomes more expensive if you decide to buy the car
If you get bonded with the car and wish to purchase it after the end of the lease fully, you will be forced to pay more money. It will cost you more than the actual price of the vehicle. You will still have to part with more cash, even if you had financed it.
Leasing vs Buying: Factors to Take into Consideration
The pros and cons of leasing a car have been discussed. But which is the best move for you? Leasing or buying? Here are the top factors you ought to take into consideration before making a decision.
- Your monthly cash flow
Leasing a car means you are ideally paying for the depreciating value of the vehicle for the time it is under your possession. It is unlike financing the vehicle, under the same loan terms, which is usually higher as you will be paying for the total vehicle cost.
- Availability of savings for a down payment
Most car dealerships which will sell you a car or finance it for you will require a down payment. This deposit is usually used as the initial payment and also acts as a security when getting the car. Most car leasing companies can get you a 6 month car lease with no deposit.
This means that you will not be forced to make any down payment for you to get the vehicle. If you are low on finances and you need a car pretty fast, leasing might be your best shot.
- How much you drive
If you will be using your car for simple city cruising and a once in while road trips, leasing might be good enough for you. If you will be using your vehicle more often, to make long trips and for business use, buying the car might be a better option for you. Leasing a vehicle has limits on the mileage and going past that will attract fines.
- How hard you are on the car
If you are prone to getting scratches or other sorts of damages to the car, leasing might not be suitable for you. Regardless of how you got the scratches and marks on the vehicle, you will still be slapped with wear and tear penalties.
- How long do you plan on having the vehicle with you?
When you buy a car, you can stay with it for as long as you want and you can sell it at any point – even a day after the purchase. Leasing terms are different from that. You will be forced to stick to the agreement and stay with the vehicle until the lease period expires.
Can Your Credit Score Affect Your Leasing Terms
In almost every financial step you undertake, your credit score will most likely follow you. When leasing a car, your credit score might not be of much concern to the leasing company. However, for some, it is a requirement. It will be hard convincing the car dealers that you will be repaying your installments in time when you have a less than a stellar credit report.
When this is the case, we always advise on scouting for other dealerships where you can get better offers instead. If you score under 620, you will still be in a position to apply for the car lease but be ready to pay a little bit more for the car. If you have a bad credit report, say below 600, it can be hard getting someone to lease a vehicle to you – but it is not impossible. This is referred to as a ‘subprime’ category, and you may have to part with a security deposit for the car.
How Leasing a Car Can Impact Your Credit Score
When you lease a car, your credit score gets affected; in one way or the other. As you make on-time repayments for the car, you will start seeing a gradual improvement on your credit score. Ensure that when you sign up for a lease, the lease company will report your payments to the credit bureaus to have them reflected on your account.
While repaying the loan on time makes a significant improvement on your credit score, you might notice a slight dip on it when you first apply for the lease. There are two primary reasons behind this;
- When the lender performs a credit inquiry as part of your lease application, it will show up on your credit report and makes it have a slight dip.
- The overall age of your accounts gets lowered when you first apply for a lease. This also has a significant impact on your credit report.
These impacts will eventually go away, but just in case you notice a dip on your credit report, you will have understood why it happened.
Getting the Best Deal for a Car Lease
When looking for a seller with the best leasing options in town, the best thing is to conduct extensive research. Shop around and find out what offers different dealers have. When your credit score is not that good-looking, you better search and compare more offers. When you settle on some, walk in ready to negotiate and stand your ground. Ask for the initial discount offers.
You can even tell them (read that as a lie to them) that you are aware of their competitor who is having certain offers (made-up of course by you). You will rest assured that they will try and match their suggestions as they do not want you going to the competitors.
Is It Worth It?
A 6 month car lease with no deposit is worth it if you fall under the categories mentioned on our guide. Be cautious; you should always be careful not to fall into the hands of scammers. , and you will lease your next car seamlessly.