When leasing a car, it’s easier to stick with the same company for your auto insurance. What
you don’t know, however, is that you may end up paying too much for your coverage and it’s better to look
elsewhere for lower rates.
When you lease, the vehicle that you will drive belongs to the leasing company. They want to
make sure that their investment is covered in the event the vehicle gets damaged, totalled or stolen.
They typically want to get covered for the difference between what your auto-insurer pays and
your outstanding leasing obligations at the time of the accident or damage.
This is called GAP, short for Guaranteed Auto Protection, and is usually included in the
leasing contract. If your leasing company is called BMW Financial Services, Chrysler Financial or any other
finance division of an automaker, then chances are your GAP insurance will be offered by the same lease
You are under no obligation to accept GAP insurance included as part of your lease agreement.
Why pay an insurance premium if you could get the same coverage for a lower price? Invest some time shopping by
comparing quotes from other insurance companies, including your existing one. Ask for discounts that you
already qualify for and adjust your coverage accordingly.
Benefits of leasing
Despite aggressive low-interest financing, cash-back offers and other purchasing incentives
offered by leading auto-makers to buyers, leasing numbers keep increasing steadily over the years. Leasing is
not only an attractive financial proposition to most auto-consumers, but also a lifestyle and preference
Benefit Number 1: Keeping up with the latest trends
Leasing is sometimes more of a personal and lifestyle choice than a financial one. Many people
are not comfortable with the idea of owning a vehicle over a long period of time. They’d rather keep up with
the latest trends of the industry and drive the latest models every two to three years.
Leasing a car gives you the convenience of having the latest technology and safety innovation,
such as an electronic stability system, DVD entertainment systems and advanced stereo equipment. If you are
willing to forego ownership for the latest set of wheels, than leasing is your best option.
Benefit Number 2: Purchasing Flexibility
Leasing also offers purchasing flexibility: it allows you to defer the purchasing decision
while using the car. You don’t have to haggle with your mechanic over repair expenses, deal with hefty
maintenance bills or worry about a depreciating asset.
Provided you can keep the vehicle in good condition and stay within the contracted mileage
allowance, you’re effectively getting a test drive for the length of your lease. At the end of your lease, you
can purchase the vehicle or simply turn in the keys and walk away. No questions asked.
Benefit Number 3: Cash Flow
Leasing offers many short-term benefits. It reduces your initial cash outlay as you do not have
to pay the large down payment required for car ownership. You only pay for the depreciation on the car - only
the part you will use during your lease, not the entire vehicle.
This results in lower monthly payments and frees even more cash. This cash can be put to use
more intelligently elsewhere than the questionable investment of owning a depreciating asset. If you are
self-employed or use your car for your job, then you can write off your leasing payment as a business
Benefit Number 4: Negotiating Leverage
Although it may seem a little unorthodox in this industry, almost everything about leasing is
If you know all the fees involved, you can lower your monthly payments, negotiate the purchase
price of the vehicle at the end of the lease and contract additional miles on top of your mileage limit.
You can also do some shopping around and compare deals from different auto-insurers to get the
cheapest GAP insurance for your lease.