What are the pros and cons of leasing a car?
The pros and cons of leasing a car
If you are in the market for a new car, you’ve probably asked yourself – what are the pros and cons of leasing a car? There are a lot of factors that go into determining whether leasing a car is a good financial choice. And there are a few questions you should ask yourself before making the decision to lease a car. But first, let’s start with the pros and cons of leasing a car.
Pros of leasing a car
- Lower monthly car payment.
- You keep the car for less time.
Cons of leasing a car
- There is a mileage limit, and exceeding it can be expensive.
- Upfront costs, such as taxes and fees, can be high.
Leasing a car is lower your monthly car payment, but it’s not necessarily right everyone. Here are four questions you should ask yourself to help you determine whether leasing a car is a good financial choice for you.
1. How many miles do you drive each year?
Every car lease has a mileage limit, typically 12,000 miles annually, so if you drive more than that – will end up with a big bill to pay at the end of your lease. And miles are charged at a per-mile rate, which can add up fast if you exceed your limit. The first step to deciding whether a car lease is right for you is to calculate how many miles you drive each year and think about how likely that is to change over the course of the lease.
2. Do you take good care of your car?
When you return a leased car, it will be sold by the dealer. So the car dealer will want to see the car in very good condition in order to get the highest sales price. So you should be ready to be charged for excessive wear and tear including – scratches, dings, dents, stains or rips. In fact, it may be cheaper to fix the damage yourself before returning the car.
3. What are the upfront costs of leasing a car?
The biggest appeal of leasing a car is having a lower monthly car payment but many people don’t consider the initial costs of getting into a lease. In order to start your lease, you’ll need to pay taxes, title and licensing fees at the lease signing, as well as the dealer documentation and prep charges. The lease may also include a down payment of some kind which is sometimes called an acquisition fee or a drive-off fee. The bottom line is that the upfront fees of a car lease can be thousands of dollars.
4. Would you be okay with driving the car longer?
One of the often cited benefits of leasing a car is that you trade in the car every couple years for a new one. But the truth is, getting out of a lease is expensive too and it’s much more difficult compared to selling a car or trading in your car when buying a new one. If you are okay driving the car longer than the lease term you should consider buying rather than leasing – it may be significantly cheaper, especially if you pay off he car and no longer have payments.
And of you’re not sure you’re going to want to drive the car for the entire lease, you should consider buying instead. Or make sure the contract allows for lease transfers which is the only semi-affordable way to get out of your lease early.
Now that you know the pros and cons of leasing a car. Go forth in the world with your new knowledge and make good auto purchase decisions.
