Buying vs Leasing
Before getting into the best time to lease a car, there are some key differences between buying and leasing a car, for those less aware of the topic. Essentially, when you lease a car, you are renting it from a dealership for some amount of time - mostly a year and a half or two years. Once your renting - or lease - period ends, you have to decide between returning the vehicle to the dealer or purchasing it from them at the pre-set amount which has been defined in the lease contract you signed. This is quite different from purchasing a car right off the bat, as you own the car immediately after you have paid the price.
It should be noted that the monthly payments for a lease tend to be lower than those for a loan. In addition, when you’re paying off the lease, you don’t build up any equity in the car you’ve leased with those payments. Also, lease payments tend to be lower than monthly loan payments because the calculations of loan payments are based on the sale price of the car, the interest rate and the time it will take to pay off the loan.
On the other hand, lease payments depend on the sale price negotiated with the dealer, the length of the lease contract, the expected mileage, rent charge, residual value and taxes. Therefore, there are some advantages to be had from entering a lease. With that out of the way, it begs the question, when should you lease a car?
The Best Times to Lease a Car
The best times to lease a car vary according to several factors. In general, the best time to lease a car is when businesses are slow - like they were during the peak of CoVid lockdowns - or it can be when at a particular time of the year or when a certain car’s popularity goes down. Sometimes, dealerships put out special offers and incentives when the year is ending, like now, or when the model year changes.
Sometimes, lease deals are cheaper at the end of the month for various reasons. This is because some dealerships apply an increased level of discount to a deal since dealerships and manufacturers have set targets and deadlines to meet when the end of the month rolls around. Meeting these milestones is important for dealers as their bonuses depend on them. If the business is slow, or the car dealership is just grazing their target, they have a huge incentive to make that number before the clock stops ticking. Cheaper lease deals are usually part of the bid to meet these targets by offering a larger discount on ‘on the road’ prices of their stocked cars so that they can sell off larger quantities in a smaller amount of time. On the other hand, you can also save a lot of money by waiting until the end of the year to lease a new car. Like with monthly targets, many dealers earn bonuses for hitting their yearly and quarterly goals. If they’re just shy of their target, you can bag excellent deals with them.
Off-peak times refer to when business is quiet, as is the case when the winter months roll around and Christmas is right around the corner. At this time of year, the concerns of every individual are something else, like the holidays and budgeting for gifts. Therefore, some dealerships may put other winter deals that can be easily negotiated. If you can afford to take on a lease payment this time of the year, it is the best time of the year to lease a car.
As the end of November approaches, it is best to keep your eyes and ears peeled for excellent lease deals. Black Friday through Cyber Monday usually offer stellar discounts across the whole range available at dealerships, as well as lower administration fees.
If you are someone that doesn’t mind being seen with last year’s model, you can score excellent lease deals around the time car manufacturers release new models into the market. This time is usually in the later summer or early fall, and many car dealerships may offer rebates in an attempt to sell out the older models so that they can stock the new ones in their showrooms. In general, car manufacturers roll out a new model after every four or six years, with a new design. You should, however, take into account that you may miss out on new upgrades and features if you decide to opt for last year’s model. Nevertheless, it is also important to remember, that if the upgrades are minimal, and the lack thereof isn’t a big deal, you can end up with a new car at a lower price than last year’s model.
Sometimes, you have a set vision about the car you want to drive. Narrowing your lenses can make it difficult to get a cheap deal on the exact make and model. If you genuinely want to bag a good deal, you should keep yourself flexible and open to what the market throws at you - you might have to give up on something minor, like the color you want or you may have to opt for another manufacturer altogether. It comes down to what your priority is; bagging a good deal or purchasing the car of your dreams.
When Shouldn’t You Lease a Car?
March and September are the worst times to lease a car. These are the months when the buzz around new cars and models is at an all-time high because everyone is looking to trade up. Since there are many potential buyers and lessees, dealerships aren’t compelled to make their prices competitive. You will likely end up paying a lot more this time of the year compared to others. Thus, it may be wise to wait a while after the release.