What is Lease Equity?

Leasing is touted as an affordable alternative to financing a vehicle, but common wisdom suggest that the sacrifice you make when you lease is the ability to build equity. Believe it or not, Manhasset drivers can build equity in a leased car. To find out how to build equity in a leased vehicle, read our comprehensive overview of lease equity. We’ll start by thoroughly defining what leasing is, and then, we’ll explain what lease equity is in detail. Once you’re done reading, contact Rallye Acura to discuss your options in Roslyn! 

What is Leasing?

Before we dive into what lease equity is and how to build equity in a leased vehicle, let’s take a moment to define what leasing is in detail. When Garden City drivers lease a car, they only get access to the vehicle for a few years. The advantage of leasing is that you only have to pay for the value of the vehicle that depreciates over the course of your lease term, as opposed to financing where you take a out a loan on the full value of the vehicle. This means that when you lease, you’ll make a smaller down payment and monthly payments. 

But what’s the trade-off? When you finance, you can sell your car at any time, and you’ll see some of the money you’ve put towards the principal of your loan (equity) returned to your bank account. This isn’t the case when you lease, but there’s a lesser known type of lease equity. Let’s take a look at what lease equity is and how you can build lease equity in a leased vehicle. 

How Do I Build Equity in a Leased Car?

The amount of your lease loan is determined by an estimated amount of depreciation that is likely to occur over the length of your lease term. The amount of depreciation largely hinges on an estimate of how many miles you’re likely to drive over that time span. If you drive far few miles than the estimated mileage stipulated in your lease terms, then you’ve paid more for your lease that than the value that you used. 

At the end of your lease term, you’ll be presented with an opportunity to buy the car. A fair and honest dealership like Rallye Acura will take the difference between the value of the mileage you’ve actually driven and the original loan value of your lease that was based upon an estimate of how much you’ve drive, and factor that value into the price to buy your lease vehicle.

Learn More About Building Equity in a Leased Vehicle

Now that you know what lease equity is, if you’d like to further discuss the strategy of building equity in a leased car, or you have a lease and you’re considering buying it out, call Rallye Acura at 516-508-9147. We’ll make sure our Glen Cove neighbors make full use of any lease equity they’ve built. Have other automotive finance or insurance quetstions. We’re happy to answer them. You can also explore our other finance and insurance tips for more helpful reads about car lease takeovers and lease return procedures!