For many people, leasing has become an attractive alternative to buying a vehicle. And why not? Leasing gives you lower monthly payments, for one thing. Plus, leasing allows you to drive a new vehicle more often, and saves you the hassle of selling the vehicle when you're through with it. If you're interested in driving a Mitsubishi, but don't want the long-term commitment or responsibility of ownership, the Diamond Lease Plan may be the perfect way for you to get into the car or sport utility vehicle you've always dreamed about.
When you buy a vehicle, you are paying off the full purchase price over the duration of the loan. So if you have a 48-month loan, you're paying for 1/48th of the vehicle's price every month plus interest, taxes and fees.
When you lease a vehicle, you are only paying for the portion of the vehicle's value that you use up — basically the anticipated depreciation on the vehicle over the lease term plus a rent charge, security deposit, taxes and fees. Here's how it works: If you have a 48-month lease, the depreciation on the vehicle is determined by subtracting its projected resale value in 48 months (a figure that's known as the estimated residual value) from the vehicle's new car price. The leasing company then adds the rent charge to the vehicle's anticipated depreciation and divides this total by the number of months in the lease term (48, in this example) to arrive at the monthly payment amount. So if you have a 48-month lease, your monthly payments are essentially 1/48th of the vehicle's depreciation plus 1/48th of the total rent charge for the vehicle.
Since the depreciation and the rent charge amount to less money than the cost of the entire vehicle when new, you're paying off a smaller sum of money with a lease than you would with a conventional loan of the same duration. That's how you get those smaller monthly payments, and explains how you can usually lease a more expensive vehicle than you could afford to buy.
Although cost is probably the number-one reason why people choose leasing over buying, it's not the only advantage leasing has to offer. The following are some of the benefits offered by the Diamond Lease Plan:
There is no down payment (referred to as a capitalized cost reduction for a lease) required with the Diamond Lease Plan, which can significantly reduce your initial cash outlay. You'll still have some up-front costs — your total due at leasing signing will include the first month's payment, an acquisition fee and a security deposit.
If you choose to make a capitalized cost reduction, your monthly payments will be lower. The larger your capitalized cost reduction, the smaller your monthly payments will be.
With the Diamond Lease Plan, you'll enjoy lower monthly payments than you would with a conventional auto loan.
By taking advantage of the lower monthly payments under the Diamond Lease Plan, you may be able to afford additional options or a nicer model.
With the Diamond Retail Plan, you'll be able to choose term lengths ranging from 24 to 72 months. The longer the finance term, the smaller the monthly payments will be, since you're now using more payments to buy the same vehicle. This may make your monthly expenses easier to manage, but you will end up paying more money in finance charges in exchange for those reduced monthly payment amounts.
The average lease term is typically one to two years shorter than most loan programs, which means you can get into a new vehicle more often.
The Diamond Lease Plan may give you some significant tax advantages if you use your vehicle for business purposes. If you're considering leasing, you might want to consult your accountant or tax advisor to see how the Diamond Lease Plan can work to your advantage.
If you're looking for a way to lower your monthly payment even more, consider this option. When you sign your lease, you usually have to pay a refundable security deposit, which is equal to the amount of one monthly payment rounded to the next $50. With this option, you can pay up to nine additional refundable security deposits at the start of your lease, which will result in a lower monthly payment. Some exceptions apply.
Since Mitsubishi Motors Credit of America, Inc. (MMCA) is the owner of your leased vehicle, you don't have to hassle with trading the vehicle in or selling it when your lease term is up. The vehicle belongs to MMCA, and so does the responsibility of selling it.
Choose one of the following three mileage options at the start of your lease term:
The Diamond Lease Plan provides you with a couple of options at lease end if you decide not to buy the vehicle and choose to turn it in to your Mitsubishi Dealer instead. You can:
The Diamond Lease Plan includes gap protection at no extra cost, which provides you with an extra measure of financial protection. If an accident, fire, or theft results in the total loss of your vehicle, and there is a "gap" or difference between the amount your insurance company pays and the amount you still owe on the lease, you will not be liable for this gap (provided you are not in default and have maintained the insurance required by your Diamond Lease Plan agreement). Gap protection does not cover the insurance deductible.
Although you are not the vehicle's owner when you lease it, you are still responsible for it. Your lease agreement will spell out all your responsibilities in detail, but they can be summarized by the following:
Under the Diamond Lease Plan, you are responsible for all routine maintenance on your vehicle as specified in the owner's manual. If you don't elect to buy your vehicle at the end of the lease, it must be returned to Mitsubishi in good condition (with allowances for normal wear). You may be charged for excessive wear that has not been repaired before you return the vehicle to your Mitsubishi Dealer.
If you plan on buying the vehicle when your lease is up, it doesn't matter how much mileage you accumulate. But if you are planning to turn the vehicle in at the end of the lease, you will need to consider your mileage requirements. If you happen to exceed your lease's total mileage allowance, extra fees may apply when you turn in your vehicle.
While Mitsubishi Motors Credit of America, Inc. owns the vehicle, you're the one who is responsible for it, so it's up to you to insure the vehicle. You must carry public liability, property damage liability, and comprehensive and collision insurance for your leased vehicle. The specific insurance limits and deductibles are stated in your Diamond Lease Plan agreement.
Although you are not the owner of your leased vehicle, you are still responsible for all taxes, license and registration fees due on the vehicle, including sales tax and personal property or excise tax (in states where applicable).