Money can be tight when you’re in college. Going to school full time and working full time can be incompatible, which means one of those activities must be compromised. It’s usually working when you’re intent on getting through school as quickly as possible. Still, working and going to school can introduce the need for reliable transportation. Lease a Car in college as it is a very affordable way to get into a new car, making it an attractive proposition when money is an issue.
However, should you lease a Car in college?
Let’s take a look.
How Leasing Works
Leasing a car, like renting an apartment, is a limited time commitment to pay a certain amount of money each month to have access to an automobile for a pre-determined period of time. In most cases this can be 12, 24 or 36 months.
Your monthly payment is based upon the selling price of the car, the amount of time the lease runs, the estimated value of the car at the end of that time period (its residual value) and the interest rate for which you qualify. You’ll also pay sales tax on that payment each month, which will vary according to the rate imposed by your municipality.
You can return the car and walk away from it, when the lease contract runs out. Other options include buying it outright or selling it and paying the leasing company the car’s residual value.
There Are Barriers to Entry to Consider
Leases, by and large, require a very strong credit history. You will typically be denied a lease if your credit score is low, or you haven’t had credit before. You must also have a steady income, or someone with one (and good credit) willing to guarantee the payments will be made each month. You’ll need to pay more for car insurance too because leased cars must have the maximum allowable coverage.
You’ll Contend With Certain Restrictions Too
Lease agreements require you to keep the mileage on the car as low as possible to help preserve its value. In most cases, this is between 10,000 and 15,000 miles annually, depending upon the type of car. Luxury cars and high-end sports cars trend toward the lower end of that spectrum.
You’ll also agree to maintain the car in very good condition and refrain from introducing modifications that cannot be reversed. Again, the leasing company wants to be able to get its money out of the car at the end of the lease. This is more easily accomplished when it’s free of excessive wear and tear and left stock. Additional charges are imposed to ensure you comply.
So, Why Bother?
A lot of people recommend college students buy a used car instead of leasing a new one. However, this means you’ll be making payments on a car that might need repairs — unless you pay cash for it. This introduces a new worry if your budget is already tight.
Meanwhile, when you understand how to lease a car in college, you’ll see it will be both new and protected by a manufacturer’s warranty. Moreover, you’ll be getting a car with the latest safety features and conveniences, often for a lower monthly payment than you’d make on that used car. The cost of getting the leased car is lower too, because you’ll need a larger down payment to finance a purchase.
To lease a car in college can be a smart choice if peace of mind is more important to you than owning a car outright. It will also leave with more money to put toward tuition and books, which can lower the amount you’ll need in student loans. Ultimately though, the choice comes down to what’s most important to you and whether or not you have the credit score you’ll need to lease a car.