Like all car financing options, leasing a car comes with its own set of pros and cons. Usually, it is cheaper (initially) to lease compared to purchasing a car through financing. However, payment is not the only thing to consider when looking into leasing a new car. You need to take into account the length of time you intend to keep the car, the distance you plan to drive it, and your ability to minimize wear and tear.
Leasing a car can seem like a great option especially with the lower monthly payments compared to buying a car. However there are some major downsides to leasing that you should be aware of before you sign on the dotted line. Here are 4 major disadvantages to leasing a car:
1. You don’t own the car.
This is the most obvious disadvantage of leasing a car. When you lease a car, you’re essentially renting it for a set period of time. At the end of the lease, you have to return the car to the dealership. This means you won’t have any equity in the car and you won’t be able to sell it to get some of your money back.
2 It might not save you money,
While the monthly payments on a lease are typically lower than the payments on a loan, you may end up paying more for the car in the long run. This is because you’re not building any equity in the car, and you’ll have to pay for the car’s depreciation over the course of the lease. Additionally, you may have to pay for excess wear and tear when you return the car, which can add to the cost.
3. Leasing can be more complicated than buying.
When renting a car, there are a number of factors to take into account, including the mileage restriction, early termination fees, and wear and tear charges. It is imperative that you comprehend each of these terms prior to signing a lease. Otherwise, you could end up paying more than you bargained for.
4. Leased cars are restricted to a limited number of miles.
The majority of leases have a mileage cap, which prevents you from driving the vehicle over a predetermined annual mileage. If you exceed the mileage limit, you’ll have to pay a penalty. This can be a major disadvantage if you drive a lot.
In addition to these 4 major disadvantages, there are also some other things to keep in mind when you’re considering leasing a car:
- You may have to pay a down payment.
- You may have to pay for insurance.
- You may not be able to modify the car.
- You may have to return the car in good condition.
If you’re considering renting a car, make sure you carefully consider the benefits and drawbacks. Although it’s not always the best choice, leasing can be a good choice for some people. It is best to speak with a financial advisor or an automobile expert if you are unsure if leasing is the right option for you. They can assist you in comprehending the lease’s terms and ensuring that you’re receiving a fair price.
Pros of leasing a car
Here are some of the benefits of leasing.
- Leasing a car gives you the freedom to swap out your vehicle more frequently. The average lease is 36 months (three years). Leasing is a wise choice if you’re interested in owning a new car.
- Reduced payments: If everything else is equal, your leased car’s monthly payment will usually be lower than that of a car that you finance. This goes for the down payment as well.
- Coverage for maintenance and repairs: For the term of the lease, many new leased cars are covered by the manufacturer’s warranty. The manufacturer or dealer may make covered repairs under this coverage at no cost to you (will not cover damage due to an accident) Conversely, in the event that you buy the car, you will be liable for all upkeep and repairs after the warranty expires.
- GAP coverage might be offered: A lot of leasing firms offer GAP coverage. In the event that your comprehensive or collision insurance does not cover the entire pay-off value of your leased vehicle in the event that it is totaled, GAP coverage normally provides you with coverage. It’s important to verify this coverage with your leasing company. If you finance the purchase of your car, GAP coverage might not be included and might need to be purchased separately.
- Buyout option: Most leases provide the buyer the choice to acquire the vehicle at the conclusion of the term. Purchasing the car might be an option if your lease includes this clause, if you find yourself attached to the car after your lease expires, or if the car is worth more than the purchase option price.
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Buying vs. Leasing a Car (Pros and Cons)
FAQ
What is the bad side to leasing a car?
Why is it not smart to lease a car?
What is the truth about leasing a car?
What are the pros and cons of leasing a car?
Below, we’ve compiled a list of the pros and cons of leasing a car to help you weigh your options. Here are some of the benefits of leasing. Upgrade often: Leasing a car gives you the flexibility to upgrade your vehicle more frequently. The average lease is 36 months (three years).
What are the advantages of leasing a car?
Lower monthly payments usually top the list of advantages of leasing a vehicle. Lease payments are generally less than financed loans for the same car because they only cover the car’s anticipated depreciation during the length of the lease. With an auto loan, the payments go toward interest and chip away at the principal. Low to No Down Payment.
What are the pros and cons of buying a car?
Buying a car has its own pros and cons. Some of the positives of buying a car include: You own the car. You can drive as much as you want. You can get cash to pay for your next car. You can make it your own. You won’t have to make payments when the loan is paid off. You can sell on your own schedule. Financing is easier than leasing.
What happens if you lease a new car?
When a lease is up, you can return it and get your next new car. By leasing, you also get the latest advances in car technology every few years. Many new cars offer a warranty that lasts at least three years. So when you take out a three-year lease, most of the repairs may be covered.