From the shiny paint, the latest dashboard technology, to the unmistakable “new car” smell, there’s nothing like a new car. Leasing a car can allow you to have a new car with a lower financial burden than actually financing a car, which can make leasing a car seem like a no brainer. So what’s the catch? Find out as we look into the pros and cons of leasing a car.
The Pros of Leasing a Car
Leasing your car allows you to more frequently and easily upgrade your car. You can easily enjoy the latest and greatest driving has to offer without being saddled with selling a car you don’t want anymore; you just return the vehicle to the dealership.
Leasing can allow you to get into a car with all the extras, which may have otherwise been too expensive to actually finance. Leasing a vehicle can make monthly payments on a luxury car obtainable for those who are looking to enjoy the comforts of a fancy car without bleeding money every month. Also the down payment to lease a car is often less than financing.
Another plus to leasing is your car will be under warranty for the duration of the lease. Exactly which vehicle issues and emergencies are covered under warranty will depend on the car and dealership. This doesn’t mean you can neglect general maintenance. Be sure to follow the recommended oil change schedule, tire rotation, and other maintenance as not properly maintaining a leased vehicle can lead to fees at the end of the lease.
The Cons of Leasing a Car
Leasing to buy is not always the best deal. Though it may seem like you’re spending less money in the long run by leasing a car, you may end up paying more than if you had financed the car outright. Though monthly payments during the lease may be lower, you’ll likely end up paying longer on the same car than you would if you had just financed the car to begin with. Also, DMV fees and state taxes will need to be paid twice, once when the lease is started and again when you purchase the car. Keep in mind taxes are initially paid on the total lease amount and then later on the purchase price.
Contrary to popular belief, interest is charged on vehicle leases. The interest rate on a lease is called a “money factor” and is determined by your credit score. On the plus side, the amount of interest paid on a lease is generally less than on a loan.
Another downfall to leasing is that most leases come with mileage restrictions. Charges for going over the established mileage of a lease can be hefty. If you regularly drive long distances, you may want to look for a high mileage lease.
Leasing to buy is where the downsides of leasing generally come into play, but don’t let that alone scare you from leasing. Leasing a car can be a great option for those who like to always have a new car and don’t mind having a regular car payment, even if that payment is small.
– By Samantha B. Rivers, Editor