There are several pros and cons to leasing a vehicle. In order to determine whether or not this is the right move for you, consider the following information.
No Down Payment
If you’re in need of a vehicle and can afford a monthly payment, leasing could be an option for you. Keep in mind that you can put money down when you lease a car in the form of cash or trade in equity; however, it’s not necessary. Doing this will lower your monthly payments.
Low Monthly Payments
Leasing a vehicle is a more affordable option than purchasing. It allows drivers to get into a newer, nicer car for less. An article written for consumerreports.org explains, “Monthly payments are usually lower because you’re not paying back any principal. Instead, you’re just borrowing and repaying the amount that the car depreciates in the time you have it, plus finance charges.”
Covered by Warranty
Another reason leasing is a great option is the fact that your vehicle is almost certainly under warranty the entire time you have it. It takes a lot of worry and burden out of driving. The vehicles available to lease are always newer models. This means that no matter what vehicle you choose, there’s a good chance it will still be covered by the manufacturer’s warranty. This could potentially cover oil changes and other routine maintenance which will save you money. When considering a lease, it’s important to make yourself aware of what is covered.
One of the negative aspects of leasing is the restriction on your mileage. Consumer reports also mentions, “Lease contracts specify a limited number of miles. If you go over that limit, you’ll have to pay an excess mileage penalty. That can range from 10 cents to as much as 50 cents for every additional mile. Unfortunately, you don’t get a credit for unused miles.”
High Insurance Premium
Leasing a vehicle means you will most likely have to pay for more insurance coverage. According to wawanesa.com, “Lenders may require a leased car to have higher coverage limits and additional coverages such as collision or comprehensive coverage. Depending on what is required, the cost of insurance for a leased car may be noticeably higher than the cost to insure a car that you own.”
Fees for Excessive Wear and Tear
If you tend to be hard on your vehicle, you may not want to lease. An article in consumerreports.org says, “If you don’t maintain the vehicle in good condition, you’ll have to pay excess wear-and-tear charges when you turn it in. So if your kids are apt to go wild with the magic markers or you are a magnet for parking lot dents and dings, be prepared to pay extra.”
Thoroughly research the pros and cons of leasing a vehicle before you commit. Depending on your circumstances, it may be a better option than purchasing.