For years, it’s been the ultimate question that car buyers need to ask themselves: should I buy or lease a new car? Despite the wealth of online information now available to shoppers trying to make this choice, it seems there’s more conflicting advice out there than ever before when it comes to deciding between leasing, buying or financing your next ride. We’re here to clear up all this confusion by providing a thorough, straightforward and honest explanation of what leasing really is.
As a Hyundai dealership in St. Paul, we’re well positioned to demystify the car lease -- day in and day out, our team helps countless customers make the decision to sign a new Elantra or Palisade lease. To tap into our staff’s expertise, we’ve sat down with Juston Anderson, Buerkle Hyundai General Manager, and asked him more than a few questions about leasing.
Ready to dive into the nitty-gritty details that will finally put to bed the leasing vs. financing debate? Check out our conversation with Juston below.
Auto Leasing Q&A with Juston Anderson, Buerkle Hyundai General Manager
How much of a down payment do I need to lease a car?
Ultimately, there’s no set number -- you can put down as much as you prefer, up to and including zero down. Many customers choose a “sign and drive” lease which means zero down. This means that the tax and licensing fees are rolled into the lease, thus increasing the monthly payment. The general rule of thumb is for every $1000 of down payment or equity, the monthly payment is reduced by roughly $30.
What additional costs will I be responsible for when leasing a new car?
Your state-required insurance would be your responsibility, as would damage that isn’t considered normal wear and tear. Some leases include complimentary vehicle maintenance for the lease term, but if that’s not the case, you may be responsible for routine service costs as well. Many leases make maintenance an “out-of-pocket” expense or offer add-on packages to cover this. Most additional costs can be minimized with available options discussed at the time of finalizing lease paperwork.
Can I lease a car with no credit or bad credit?
All vehicle brands have an assigned lender partner which handles the “financing” of lease transactions. Lease approvals begin with credit scores of 620+. The best or “advertised” lease offers are typically for credit scores of 700+. Exceptions are granted occasionally in situations where there are offsetting factors like good work history, residency, cash down, equity or history of on-time lease payments.
What’s the best length for a car lease?
36 months is a typical lease term. Preset mileage limits (without penalty) range from 10,000 - 15,000 miles per year. Note that the annual mileage is just a guide, and that the total mileage allowed is determined at lease inception. So, a 12,000 miles-per-year lease is 36,000 miles at the end of three years. Any mileage beyond this will result in an added depreciation cost.
Can I buy my leased car at the end of the lease?
Absolutely! You have three options at the end of your lease. The first is to buy it out for the predetermined amount based upon your residual value. The second is to turn it back in to the dealer and walk away. Third, you can have the dealer provide you with a value and determine if there is any equity to apply to another lease. Also, many brands offer loyalty incentives for you to re-lease.
Does a lease come with a warranty?
Yes! One of the benefits of leasing is that your car is typically always under warranty. You also will be driving the vehicle when everything is new, so consumables like tires and brakes should last the entire lease period.
How can I get the best lease rate?
Lease rates are typically referred to as a “money factor”. Thebest rates begin with credit scores around 700-720. However, there are many other factors which are considered. Our Business Manager can discuss this further with you at the appropriate time.
How much are monthly car payments for a lease?
Promoted lease payments are a method of advertising. This means the advertised payments are typically low relative to conventional financing. It’s common to see lease payments starting around $299-399 per month on entry level model and trims with tax and license fees down.
What happens when my lease ends?
You’ll be required to either turn in the car or arrange purchasing it at the stated residual value. To avoid rushing into this decision, we suggest keeping in contact with our team during your lease term. A good time to check in with our lease specialists is during your regular service appointments, as this kind of due diligence can result in learning about applicable Hyundai sales and specials before your lease is up. If you decide to wait, a good time to reach out to our team is about six months out from lease-end.
Is leasing a car cheaper than buying?
Leasing can be cheaper than buying if you compare the cost of leasing against the first three years of a traditional six-year financing contract. The first three years are considered the “honeymoon phase” of vehicle ownership. The next three years can result in additional expenses like tires, brakes and other maintenance. In other words, when you traditionally finance a car, the period during which the car is 3-6 years old is when out-of-pocket service expenses begin to accrue. Knowing this, leasing can be cheaper and less of a headache than financing and ownership, making it an ideal option for many shoppers.
Lease a Hyundai Near Me
If you still have questions or need more details about car leasing, Juston Anderson, our General Manager, is here to help, as are our Hyundai lease specialists. Contact us to explore your car leasing options with our team today!
