When searching for a new vehicle, some people have to make a choice between buying or leasing a car. The process of this could be extremely difficult, especially for younger drivers who are thinking of buying or leasing a new car for the first time.
According to Kelley Blue Book, nearly a third of new car shoppers chose to lease their cars, but today, fewer than 19% of buyers choose this option. Although the percentage of car leasers are decreasing, leasing a car still has its perks. In this article, we provide a list of pros and cons to leasing a car.
Pros of Leasing a Car:
Lower Monthly Payments
One of the biggest advantages of leasing a car are the monthly payments, as they are significantly lower than buying a car. When you lease a car, you typically pay only for the depreciation of the car you are using rather than paying off the whole car itself, which causes lower monthly payments. If you are not able to keep up high monthly costs due to various bills, having a lower monthly cost for your car would be beneficial to decreasing your overall monthly bills.
Lower Upfront Costs
Leasing a car usually requires a lower down payment than financing or buying a car, which definitely makes it more accessible to individuals who don’t have enough saved for a down payment. Along with this, you are still able to negotiate lowering the price of a leased car similar to negotiating a lower price for buying a car.
No Trade-in Hassles
Because you are leasing a car, you do not have to worry about having to sell or trade in the car. When the lease ends, you can simply return the car to the dealership without the stress of convincing someone else to take it or negotiating a price to sell it for.
No Long-term Obligation to Older Cars
Leasing a car usually lasts two to four years, meaning you would have to find a new car to lease or buy. Typically, most people tend to lease cars that are newer, so when a lease ends and you start a new one, you will be able to acquire an upgrade to a newer car and receive the latest advances in car technology every couple years.
When leasing a car, it will always come with a warranty. Usually, your lease should not last longer than the warranty of a car. Because of this, you will have easy access to regular maintenance for your leased car, along with most repairs being covered.
Something to note, however, is to look for a deal with gap insurance. Gap insurance will pay the difference between what you owe under the lease and what the dealer can recover for the vehicle if the vehicle is stolen or totaled. This could potentially save you thousands of dollars.
Cons of Leasing a Car:
At the end of a lease, you are responsible for returning the car in good condition. After returning a leased car, you may be hit with a number of charges including a wear-and-tear fee and a customization reversal fee, if you customized the car.
Additionally, in the case your warranty ran out before your lease ended, you may be hit with expensive repair fees. This could become more expensive if you do not have gap insurance and are involved in a car accident. You may potentially end up dealing with the hassle of repairing or replacing the damaged rental car while simultaneously facing the major medical expenses that even minor collision injuries can cause.
Little to No Customization
When returning a leased car, you typically have to send it back in the same condition you received it, meaning you may not customize the car to your liking or if you do customize it, you may have to change it back to how it was before or pay a fee to reverse any changes.
Most car leases come with mileage restrictions and if you go over the restrictions, you’ll be charged a fee. This is a negative for those who need to travel long distances and commutes. Most leases usually limit to around 10,000 to 12,000 per year but you may negotiate or make a deal for higher limits.
Leasing a car is essentially like renting an apartment – you only keep it for a set period of time. This can be both a pro and a con to different people, but as a con, it means you do not have any equity with the car, especially if you end up liking the car a lot. You can, however, end up making a deal at the end of the lease to purchase the car.
Whenever you lease a car, you essentially are put into a contract and you have to stay committed to that contract until the end of it. In the case you have to end a contract early with a car lease, you may be given penalties and will be charged an early termination fee.
The Choice is Yours
Although leasing has been decreasing for car shoppers, it can have its advantages and disadvantages. Choosing whether to lease or buy a car will depend on your own financial situation and preferences. If you are someone who needs cheaper, short-term plans, or someone who just does not want to commit to a long-term car, consider looking into leasing a car.