In September of 2015, I leased a car for the first time. This was my first ever lease, and now I’m in the final year of it.  Soon, I will need to seriously think about what my plans are for next year.  Realistically, I have three different options.

1)    End lease with another lease:  Many lessees are more than happy to continue leasing.  My manager is one of those people, but I don’t know if I am.  The “new car smell” and living the worry-free maintenance life are very enticing.  Adding further to the temptation is that leases often come with lower monthly payments.  On the other hand, there could be some fees when you return the original car—especially if the leasing company is not happy with the car’s physical condition.  I’m constantly transporting my kids to one place or another, so my car is not as mint as it was in September of 2015—not that it is damaged, of course.  However, it is “lived in.”  Another big consideration is you never build equity on a vehicle that is leased.  When you lease, you willingly give up the chance to own an asset—albeit one that depreciates.  Most leases also start with some money down—or if not, your terms are not as friendly, so it is necessary to save during your original lease for the next down payment.  Lastly, property taxes remain at a high point as you keep driving a new car (yes, you still pay that—I never knew that until I leased.)

2)    End lease and find a car: If you didn’t like the car you owned or leasing cars in general, this is your best option.  You are now free of the lease and have a whole world of purchasing and lending (hint: think of us) options are at your disposal.  That’s not to say that all is perfect, of course.  You may have some costs when you return the car.  Also, financing a new car will almost certainly lead to higher payments (unless you saved especially well during the lease or are downgrading.)  In addition, you often are no longer driving “worry free” unless you’ve purchased a warranty or it is a new car.  

3)    Buy the car you are leasing outright: If you’re comfortable, you may be tempted to take the purchase option that you have at the end of the lease—the price at the end of your lease is known as the reserve price.  With a good reserve price, it might make sense to purchase your car.  This might also apply if you’re worried about the miles you’ve accumulated or other fees you could incur when returning your car.  Of course, if you are not happy with the car, the cost to finance it is out of your price range, or the reserve price is not favorable, then this is not the best option.  As with #2, you are may now be responsible for repairs and maintenance, and your car has depreciated since you first drove it off the lot to begin your lease.  Finally, you still have to determine how you are going to finance the car—and for how long.  More decisions. I still have time to decide, but I am already mulling these options. There have been some transitions in my life over the past year, so I am not completely sure what I am going to do.  I like the way my car handles, have been even more conservative on miles than the lease term, and the reserve price is favorable.  Yet, getting another new car in September 2018 is extremely tempting.  I’ll tell you what I decide next year.

What will the end result be?  I don’t know—but a year goes awfully fast.  Fortunately, I work for a great place to finance a car—I can even do it all online. Check out our online loan application now by clicking here