Get Lower Payments and More Car per Dollar with Car Leases

Leasing a new car from car dealers in El Paso has its advantages over traditional financing and purchasing the vehicle upfront. With car leases, your monthly payments are typically much lower, allowing you to afford higher priced vehicles without going above your budget. You might be wondering how it is possible to lease a higher priced vehicle. The answer is directly related to the lease’s payment terms and conditions.

Lease programs only require you to pay a fraction of the cost of the vehicle based upon the length of the lease. You monthly payment includes two different amounts: monthly vehicle depreciation and monthly finance charge.  Further, rather than paying the full amount of sales taxes upfront, like you do with conventional financing, you pay the taxes on a monthly basis, which are charged on the dollar amount of the monthly payment, not the total price of the vehicle. In the event you have a down payment and/or vehicle trade-in allowance, these are deducted from the final price of the vehicle you negotiated with the car dealership in El Paso.

For example, if the total price of the vehicle you were looking at was $22,000, and you had a $3,000 down payment and a $4,000 trade-in allowance, the adjusted price used to calculate monthly lease payments would be $15,000. For illustrative purposes, let’s say the lease period was 36 months, and the vehicle was being depreciated over 10 years (120 months). This would mean your monthly depreciation amount is $150. Let’s say the monthly finance charge is $20 and the sales tax rate is 8.5%. So, your monthly payment is $150, plus the $20 finance charge, plus 8.5% sales taxes on $170. In other words, the total monthly lease payment is approximately $185.

Now, let’s compare the costs of financing to demonstrate how leasing makes it possible to afford a more expensive vehicle. Rather than leasing, you decide to finance the $15,000 and purchase the vehicle upfront. On top of this $15,000, you also have to pay $1,870 in sales taxes on the original vehicle price of $22,000. So, the total amount financed is $16,870.  You decided to take out a 5 year (60 month) loan with an interest rate of 3.9%. Your monthly payment amount is approximately $310 per month.

From these examples, it should be a bit clearer why leasing has lower monthly payments and makes it possible to afford vehicles that would be normally be outside your price range using conventional financing. At the end of your lease period, you always have the option to purchase the vehicle. If you do decide to purchase the vehicle, then you are only financing the value left in the vehicle and paying taxes on that amount, not the original purchase price. To learn more about lease programs and to find out if a lease if right for you, stop by Integrity Kia today, or contact us by phoning 915-856-2982.

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