Most people are confused about the mechanics of leasing a car so they tend to believe the myths they hear. As a result, they decide to purchase their cars without even looking into the many advantages of the leasing option. If only they take the time to get their facts straight and understand how car leasing goes, they can enjoy its numerous advantages over outright purchase. If you're shopping for a car, take a moment to study closely the leasing and purchase options so you can be assured of making the smarter choice. Here are the three common myths on car leasing that you should be aware of:
Myth #1: You won't get any tax breaks if you lease a car.
While only businesses can deduct monthly lease payments as expense items, individuals do get to enjoy a tax break also. This comes in the form of sales taxes. In most states, individuals are required to pay taxes only on their lease payments whereas if you buy a car, you pay taxes on the full amount of the purchase price. People buying a new car generally secure a loan with a term of five to seven years. In comparison, a lease contract is good for only two to four years. Thus, when you lease, you get to save about half of the taxes you would have paid had you bought the car. Then again, some states like Arkansas, Maryland, Minnesota, Texas, and Virginia require tax payment on the full value of a leased car.
Myth #2: It is more expensive to lease a car than buy one.
Myth #3: You can't negotiate the price of a leased car.
When you go shopping for your car, you can always ask the dealer to give you the lowest capitalized cost. You should try to haggle as hard as you would if you were buying the car. The residual value is also negotiable. A lower residual value can mean higher monthly payments and vice versa. Try to do the math before making your choice. Be sure to ask for the money factor a dealer uses because the lower the number is, the better it is for you.