Leasing Your Chevy (What You Need to Know)

For a large number of us, purchase of new vehicle follows the traditional method of choosing between new or pre-owned, securing financing and spending the next 3-6 years making monthly payments to the lender. Each amount is broken down to into principal and interest, eventually resulting in ownership (and the hope of an extended vehicle-life, without the burden of monthly payments).

That said, the process can feel all-too cyclical. Even if a vehicle enjoys an extended life, there is a finite nature to its existence, regardless of how diligently it is maintained. Eventually, you can expect to end up locked within another payment cycle.

Acknowledging the cyclical nature of car payments, more and more drivers are choosing to lease their vehicles, as opposed to buying them. And for those interested in a Chevy lease, the Right Lease program offered up by General Motors is well-deserving of consideration. With that in mind, let’s take a moment to explore the upside (and yes, downside) of leasing.

The Upside of Leasing

As mentioned above, purchasing a car with traditional financing becomes cyclical with each subsequent vehicle purchase. If your only hope for respite is based on the chance of your vehicle operating for years past your loan payoff, it seems little more than a gamble.

The alternative offered by a lease is based around acknowledging that, yes, you will always have a payment. However, that payment will be less because you’re not paying back any principal. In a lease program, your payment is designed to offset the vehicle’s depreciation plus financing charges, making the payment lower than that of a traditional loan. With significantly lower payments, the burden is lessened, and you may be qualified for a higher-priced, better-equipped vehicle than you’d previously been able to afford.

With most lease programs based on a 36-month period, you’re also empowering yourself to drive a vehicle during its strongest years of operation. This means that you’re likely to minimize stress and expense, especially related to long-term maintenance and repair. Also, the vehicle itself is likely to be covered by the manufacturer’s original warranty(s) which may entitle you to scheduled and/or complimentary maintenance to ensure that the vehicles perform at an optimum level.

Having mentioned depreciation, participating in a lease program means that you are absolved of such concerns. When purchasing a new vehicle, it begins to depreciate the moment it is driven off the lot (to the tune of 11%). This means that a $30,000 vehicle might be worth less than $27,000 if you were to turn right around and try to sell it back to the dealer. After a year, it may have decreased in value by as much as 25%. After three years? Up to 46%. This means that any attempt to trade-in or re-sell your vehicle results in a lesser return on your investment. When a lease is up, you simple return to the lot and drop the car off, with the option of starting a new lease agreement.

The Downside of Leasing

Ultimately, most of the downsides to leasing are relatively self-evident. First, you will never own the vehicle, which puts a certain amount of responsibility upon you to maintain it in a manner that helps to maintain its value. Failure to prevent wear-and-tear or damage could easily result in additional charges.

The same could be said for excessive mileage being incurred. All else programs are based on mileage restrictions, designed to help retain the vehicle’s long-term value. Failure to comply can lead to additional charges, ranging anywhere from 10 to 50 cents per mile.

The lack of ownership also means that you are limited regarding the modifications that you can make to the vehicle since they could negatively impact its value.

Finally, any need to terminate a lease agreement before its expiration could result in penalties including (but not limited to) early terminations fees in the hundreds or thousands of dollars.

Also Worth Considering

While there are countless positives to ownership of a vehicle, there are downsides. For example, financing a vehicle over 60-72 months can expose you to be at risk of being upside down in your loan, in the event of accident, theft or if you simply decide to get rid of it. This comes when monthly payments against the principal are less than the rate at which the vehicle depreciates. Simply put, this means that you own less than you owe.

This speaks to many people’s tendency to seek out their dream vehicle. In all-too-many cases, this leads the purchase of a vehicle and/or trim level that exceeds the buyer’s budget. The result could be (i) a monthly payment that they are unable to sustain (ii) the need for a lengthier loan period, such as 72 months versus 60 or (iii) a combination of the two. Any of these scenarios, combined with being upside-down in a loan, can create long-term fiscal strain.

While such concerns may not apply to all buyers, it’s worth reiterating that a lease can provide the opportunity to obtain a ‘dream vehicle’ while making certain that it conforms most closely to their budget. With lower monthly payments (as stated above) and a shorter commitment (36 months versus 60/70), a buyer is far less susceptible to risk. Combined, all of these reasons make a lease well-worth considering.

Which is Right for You?

While that’s for you to decide, there are pros and cons to both buying and leasing. Make an informed decision based on both your budget and the demands of your lifestyle. And should you decide that leasing is something that you want to explore, let DePaula Chevy help you to explore the Right Lease program offered by General Motors. Available to qualified applicants looking to lease a Chevy, Buick, GMC or Cadillac it may just be the perfect fit.