To lease or buy? It’s a question that everyone faces when shopping for their next car. Today, it’s a relevant question as leasing is more attractive than it once was. Consumer results show that opting for the lease has gained popularity over the years. Today, more than 30% of vehicles get leased instead of purchased, up from 17 percent in the early 2000’s. So, which is better? The answer is not that cut and dry. It has a lot to do with the buyer and their personal situation. It requires some consideration before you decide. Knowing the pros and cons of leasing a car can help car shoppers make the right choice. So, let’s dive in! Here are the most important considerations when you’re thinking about leasing a car.
The Pros of Leasing a Car
Leasing is renting a car for a long term, usually 2 or 3 years. They tend to be much easier to close than a traditional sale, too. Here are some of the best reasons to take a lease over buying a car.
1. No Hassle Transaction
Haggling for a new car is a major stressor for most people. With a lease, there’s no need to negotiate. The car is worth what it’s worth, and that doesn’t affect the terms of your lease. The lease is a deal that is already written. You like the terms, you sign the lease. This makes for an easy, stress-free transaction.
2. Lower Payments
Leases come with lower payments than a traditional car purchase. This is because the car depreciates over the course of the lease. If you can afford the payment, it may be a good option for you. Leasing can be a good option for consumers who need a higher quality car at a lower payment. However, don’t make the decision based on payment alone. It may not be the best choice when you consider other factors.
3. Easy Trade Outs
At the end of the lease, you bring the car back to the dealership. Then you have the option to buy that car or sign for another one. This is a perk for people who love to trade cars after only a couple of years.
4. Factory Warranty
Hands down the best benefit of leasing a car is that it remains under factory warranty. That means you take it back to the dealership if any mechanical problems arise. The dealership fronts the cost of normal wear and tear, including routine maintenance and tire care. Be sure you understand what they define as “wear and tear.” You’ll want to take extra care to avoid damages they won’t pay for.
5. Nicer, Higher Value Car
Since the payments are lower, you can usually afford a much nicer car than in a traditional purchase. This can be a great benefit if you like to trade out cars and drive very little. You’ll also have a car with modern technology. A nicer, higher quality car is good for people who drive their car for business, entertainment, or anyone who simply loves driving a high-quality car. And, because it’s a lease and not a purchase, you don’t need to worry about buying a lemon.
The Cons of Leasing a Car
While all those things are good, we need to compare them to the less attractive qualities of a lease. Here are a few things that might make you think twice.
1. Mileage Caps
You don’t get unlimited mileage. Most leases are set around 10,000 to 12,000 miles during the lease contract and if you exceed this cap, you pay for it. If you drive more than that, consider paying extra for extended mileage up front. It can save you money in the long run. Check the terms of the lease to be sure that option is right for you.
2. Down Payments
Unless the dealership has a special promotion, you’ll still need a down payment – sometimes a pretty hefty one. A typical 3-year lease could need a $2,000 signing payment. Each time you lease, you’ll pay another down payment. This is money you will never get back.
3. No Ownership
You don’t own this car at the end of the lease. This is one of the financial drawbacks. Your money is not buying a product, it’s only renting it long term. So you have nothing to show for your investment at the end of the lease. You may get the option to buy it at the end of the lease. Otherwise, it’ll get returned to the dealership. You’ll need to find another car and pay another down payment.
4. Extra Costs for Damages
If you damage the car it will cost you. A lot. The dealership will not pay for damages outside the normal wear and tear of the vehicle. You must pay for it. You’ll have to pay for the dealership to repair any damages, though, not your local mechanic. Carry good insurance when leasing. Accidents do happen, and you don’t want to get stuck with a huge repair expense.
5. Cost More Over Time
Overall, leasing may cost more over time. You put a down payment on the car and pay the monthly lease payment for two or three years. But, you have nothing left at the end of the contract. Some people would call that throwing your money away.
Who Benefits From a Lease?
As you can see, there’s a lot to consider. In some ways, a lease is a good option, but only for the right buyer. In general, people who expect to drive little and trade out a lot enjoy a lease. It might also be a good option for those that need to drive a nice car for a living. As long as they consider the mileage limitations and prepare in advance.
Consider the List, Then Decide
Think hard about the pros and cons of leasing a car before you do it. While there are some great benefits, the negative aspects can affect you in the long run. Make sure you understand the terms of the lease contract. Then, do what feels right for your situation! Looking for information about protecting your car lease? We’d love to hear from you! Contact us, here.