3 Creative Car Leasing Options

Money and car keysAuto leasing is a business. Simply put, you’re paying for the privilege of driving a vehicle during a certain portion of its service life (usually when it’s new and nearly new) by financing its depreciation during that time. Meanwhile, a finance company is happy to do that—with a little profit for themselves, of course.

But there’s more than the typical closed-end lease you might arrange for with your bank or credit union, or at the dealership. If you’ve considered whether leasing is right for you, and you’re still not sure, here are a few other leasing possibilities you might find useful:

Consider an open-end lease. Any lease you might typically be offered at the new-car dealership, or at your bank or credit union, is most likely a closed-end lease. That means you’re essentially financing an anticipated amount of vehicle depreciation—based on the lender’s anticipated value (or residual) for the vehicle after the lease duration. With an open-end lease that’s different, as you’re making up any difference in value at the end of the lease period. Open-end leases are mainly offered on classic and collectible cars (those that might be appreciating), but if you’re looking for a vehicle mainly for image (a high-end sports car or ultra-luxury car, for instance), and it’s a vehicle you’ll good care of and use lightly, an open-end lease might work out in your favor.

Yes, you can get out of your lease…maybe. The down side is that you’ll need to place your lease “on the market”—through a service like LeaseTrader or SwapALease.com—and wait for someone who’s willing to accept your terms and assume your lease. You’ll pay a modest fee; but you could be completely free of your otherwise potentially credit-damaging financial obligation.

You can lease used cars, too. Of course, since cars slow down in their depreciation after the first two or three years, you won’t have nearly as much depreciation to finance and your payments will be a lot cheaper. The down side, however, is that you might not be driving the newest, freshest vehicle. But if you’re a deal-seeker and leasing seems like the right choice for your needs, some of the best lease deals on the lot could be certified pre-owned (CPO) used cars—those that have had an exhaustive inspection and are covered effectively by an extension of the factory warranty.
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