What is a Lease?
Use of a product for a fixed period of time at a stated payment with no form of ownership included.
A simple definition: A non-equity purchase.
Purchase of Vehicle: Exchange of Money for a product.
When you buy, you pay for the entire cost of a vehicle, Regardless of how many miles you drive it. You typically make a down payment, pay sales taxes in cash or roll them into your loan and pay an interest rate determined by your loan company, based on your credit history. You make your first payment a month after you sign your contract. Later, you may decide to sell or trade the vehicle for its depreciated resale value. In reality, at the end of the typical five-six year loan period you may well own the car, but chances are you really wanted to trade it in a year ago or earlier. Since this is a depreciating asset, it loses value over time with some makes and models depreciating faster than others. so, the car you now own and don't really want and isn't worth very much when you try to trade it in. However, pride of ownership is important to many consumers; others just want to drive a vehicle till it falls apart!
When you lease, you pay only a portion of a vehicle's cost, which is the part that you " use up" during the time you're driving it. You have the option of not making a down payment, you pay sales tax only on our monthly payments (in most states), and you pay a financial rate, called money factor, this is similar to the interest on a loan. You may also be required to pay bank fees that you don't pay when you buy. Note that Subaru does not require a security deposit. You make your first payment at the time you sign your contract-for the month ahead. At lease-end, you have three options regarding the disposition of the car.
1. Keep the car because you are in love with it. You pay based on the guaranteed future value (GFV) established when you originally leased the car.
2. Sell or trade the car. If the value of the car is a actually HIGHER than the GFV, you can sell it or trade it and keep the equity (profit) in your pocket.
3. Walk away with no negative equity. Why keep a car that has a value lower then the GFV. At that point you can lease or purchase another vehicle.
Subaru leases are typically 10,000, 12,000, or 15,000 miles per year but can be customized up to 30,000 miles to meet your particular needs. If you have a predictable life style and driving habits where you can "guesstimate" that your annual mileage will fall within these parameters, then leasing is a viable option. However if you exceed the allowed miles at the end of a lease, expect to pay .15 per mile overage fee. This is why it is important to know how many miles you expect to drive a year.
Subaru Leases have automatic built-in-gap coverage , while car purchases loans almost always do not. Gap coverage, or gap insurance, pays the difference between what you owe on your loan or lease, and what your vehicle is actually worth if your vehicle is stolen or destroyed in an accident. why is gap insurance important because it's very common, in these days of long-term loans and leases, rolled-over and refinanced loans, and little or no down payment, to be " upside down" - to owe more on your loan or lease than your car is actually worth. This can mean you'll still own hundreds or thousands of dollars to the finance company even after your insurance has paid for your car that has been totaled or stolen. This turns out to be a huge shocking surprise for most people caught in this unfortunate situation. So, Subaru leases have built-in gap protection, but loans do not. Your better protected with a lease, unless you purchase the gap insurance separately at extra cost for the loan, Tonkin Subaru offers GAP insurance on all purchase plans.