Most people will tell you that buying a car is the smartest way to go; and from a financial perspective that could be true. If you make the higher monthly payments, pay off the loan in full and then keep the car for at least a few years after. But leasing a vehicle has some great options as well, it can be less expensive month-to-month, and if you like a new car every few years, it may be the way for you to go. The best way to make a decision is like Mom says right? Make a list of pro’s and con’s.
Pro’s of Leasing
Less commitment. Hey you commitment fobs – here you go. Most lease terms are 24 to 36 months. At the end of the lease you have the option to buy out the lease and keep the vehicle, or return it to the dealer, hands clean.
Lower monthly payments. Essentially this is just paying for the time you are driving the car, versus the full car price. It’s a long term rental agreement you may say. So therefore you can get more car, for less.
Low or no down payment. Watch for incentives; sometimes they offer a super low or NO down payment at all on a new lease especially if you have a good credit score. Combine that with the lower monthly payment, and it sounds like a pretty sweet deal.
Manufacturers warranty. The warranty from the manufacturer is usually for the entire term of your lease agreement. Which means no extra out of pocket costs for maintenance or repairs.
Con’s of Leasing
Sometimes leasing has higher finance charges.
Leasing contracts can restrict your travel! Leases restrict the number of miles you can drive per year, or per lease agreement. They usually want you to stay within a 12,000 to 15,000 mile per year mark. If you are someone who travels a lot for work, or has a long commute, leasing probably wouldn’t be a good idea for you. They can charge you if you exceed the miles, and that can be quite the hefty fee!
Again, you don’t own the vehicle. It’s not yours. In essence , you are renting a car for a very long period of time.
If you have kids – especially young kids – the wear and tear penalty fees could really add up. Or if you are a ‘bumper’ you know, you bumped into the pole, into that cart, or you just overall aren’t meticulous about the condition of your vehicle, the fees could really cost you a lot.
If you are looking for flexible, affordable ownership options and the ability to drive a brand new vehicle every couple of years, leasing is for you!