If you've been busy scouting out the best buys in new vehicles, you may be concentrating your efforts on choosing the model, make and options to fit your needs. But eventually, the question of financing arises. Should you buy or lease?
The popularity of leasing continues to rise. In fact, by the end of the decade, manufacturers expect half of all new cars to be financed under a leasing program, whether it's for a single car or an entire fleet.
When you lease a vehicle, you sign a contract with the lessor that gives you the right to use the vehicle during a specified time period for an agreed-upon payment. You do not own title to the car, but you are responsible for fees such as insurance, licensing and registration.
Paying cash for a car will always net you the best price because you won't be paying interest on a loan, but is that the best way to use your available capital? When you consider that the greatest benefit of leasing for the self-employed is the tax deduction for leasing payment interest, you'll probably think twice about tying up your savings or stretching your credit line to purchase a vehicle.
Recognizing our desire for new cars and the difficulty in paying for them, car companies are crunching numbers and coming up with innovative pricing to appeal to buyers. Dealers are more willing than ever to custom-tailor leasing programs and are offering more incentives. For instance, Cadillac's SmartLease program on its DeVille model is $50 less a month in payments than it was two years ago. And if you already own a Caddy, you can take $1,000 off the $2,800 down payment.