Ask a car salesman
Were on 4th lease. Small SUV Ford Escape. I pay extra for a policy to cover damage if any at end of lease. I think its great. Nice up to date car all the time. Only problems we have are the electronics and that's us not the car. 4 cylinder with charger goes plenty fast enough entering freeways.
I leased my first vehicle last year 2015 just after Christmas a 2016 Ford explorer. It is my wifes vehicle and her commute to work to is about 2 miles. We took a family vacation to Kentucky last year and it just turned 12,000 miles on it this week. Mileage is not a problem for us. I was also wary of having nothing at the end of the lease. We saved $150 a month with a lease instead of buying. We always put our vehicles on a 6 year note. Usually would get a new vehicle about the time we paid it off anyway. I guess I except the fact that we will always have a car payment. I like the fact that the main family vehicle is updated and dependable. We also got some features like heated seats, leather, navigation that we never would have paid for if we purchased. Even after 3 years the buy out would probably be about we would have still owed anyway. When the lease is due in 2019 I will find out how it goes. Because I will be well under mileage I hope for some equity.
You never want to lease with the intention of building equity ! 85 % of the time that doesn't happen. Leasing is definately not for everybody. However is has developed into 25% of our New car business because of the affordability and tax savings. Lease customers only pay approx 50% of the sales tax that you pay when you "Buy" it. The advantage of a lease is your payment is significantly less than a purchase payment and you typically don't have any repair expenses to fork out either. No tire expense, No brake expense etc etc. It is true that you dont have ownership of the vehicle at the end of the lease term but in its place you should have the difference in the payments in the bank instead of the equity in the vehicle. If you lease you will probably always have a car payment, but its usually half what a purchase payment will be and your usually always under warranty and driving a car with the latest technology and safety features. If your the type of driver that keeps a vehicle for a long time then leasing is not for you. Its just an alternate way of financing a car or truck
I too would like to understand vehicle leases as I'm about a year from replacing my old pickup. How do you build equity in a leased vehicle? I never considered that option because I always viewed leasing as a way to get a new vehicle at a reduced monthly payment. Downside was that after the term was up, you're left with nothing unless you buy the vehicle.
They "calculate" how much the car will be worth at the end of the lease. If your vehicle is worth more than that calculation you have equity. If it's worth less you won't owe the difference, however the price they tell you that you will pay for the vehicle once the lease is over stays the same. When I traded in my van last year I had 1,500 in equity and I went to a different dealership, told them I had equity but did not tell them how much, and I actually got 3,000 in trade for the vehicle! That's in addition to what I owed for the vehicle had I bought it.
Overage on miles can get expensive if you drive a ton of miles. I'm on pace for about 9,000 miles over by the end of my lease, which, at 15 cents a mile would cost me $1,350, but then most dealerships won't charge you the overage if you buy another vehicle from them. That's what Toyota does, at least. Not sure what Dodge will do to me, but as of now I plan on buying the vehicle anyway. It'll be a lot more affordable in 2 more years.