When it comes time for a new car, your two primary choices are leasing or buying. Each offer their own benefits and drawbacks. Therefore, deciding between them can be a bit complicated. To simplify the process and help you determine which is the best choice for you, read below on the benefits and drawbacks of leasing, since we can assume most of you know the benefits and drawbacks as they relate to owning or financing a car outright:
The Benefits of Leasing
- It Can be a Less Expensive Way to Drive a Really Nice Car: When you lease a car, you don’t pay for it in its entirety. You just pay for the depreciation that takes place during the time in which you are driving the car, plus interest and fees. Often, you will be required to provide a down payment for the vehicle at the time of your lease. This is often called your drive off costs. Your monthly payment will usually be less for a leased car than if you were to finance the same car outright, simply because you aren’t financing the entire portion of the purchase price.
- Change Vehicles Often: If you get bored with driving the same car each day, leasing can be a great alternative for you. This is because the lease agreement is often less lengthy than a finance term, usually just a few years. When it’s up, you bring in your lease, and in essence trade your leased car in for another model. This means you can frequently change models and keep up with the latest advancements. Speaking of which…
- You Can Get The Latest Tech: Car manufacturers are always attempting to add more technology and features each year. Therefore, when you lease, you get the benefit of the latest technology and even better gas mileage by having the latest greatest model.
- Little or No Maintenance Costs: Most all repairs will be covered by the manufacturer’s warranty since your lease will only be a few years. This is, of course, assuming you don’t put an excessive amount of mileage on the car.
Drawbacks of Leasing
- Limited Mileage: Speaking of mileage. This is a big downside of leasing a car. You will be penalized for driving more than what the dealership deems appropriate. If you go over your allotment, you can be looking at an additional charge of 15 to 30 cents per mile, every mile you go over. Your lease agreement will have the number of miles you can drive per year listed and if you go over, you will pay for it.
- You Don’t Own The Car: After paying what you owe in a traditional purchasing agreement, you come away owning a car. This isn’t the case when you lease. When you reach the end of your lease agreement, you don’t have anything tangible to show for it, and you don’t have a car that can be traded in on the purchase of an additional car.
In conclusion, if you live in a rural area and/or drive a lot and are more apt to go over the mileage limit, leasing is probably not going to a cost effective option for you due to the excess fees. However, for others, it can be a way to drive a nice car for less investment.