The Pros and Cons of Leasing a Car
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Let’s compare leasing a car versus buying the same kind of car. Lets state the advantages and disadvantages of leasing using several different categories, in that way this might be a helpful guide for some drivers who are trying to make that decision. Most of the people who prefer leasing appreciate driving around in a new or nearly new car, do not drive their car for many miles during the year, and take good care of the car during that time. Leasing is often a better option for those people who truly prefer driving the current year model, or at least a very recent model. It is also an option for those people who want to drive a car whose full sticker price is somewhat beyond their current price range.
One of the major advantages of buying a car as opposed to leasing is that you actually are paying money and will have something at the end of that time. At the end of the lease term the vehicle must be returned in good condition, unless the option is chosen to buy it. At the end of the lease term, it is necessary to either lease another vehicle or finance the purchase of some vehicle.
The costs that one pays initially typically include the first month’s payment, a refundable security deposit, taxes, registration, and various lease fees. Some lease agreements ask for payment of the a vehicle down payment also at this time, but that depends upon the lease. Monthly payments for a lease are calculated to cover the depreciation of the vehicle’s worth over the term of that lease. For example, if the car’s value at the end of the lease term is $12,000 less than at the beginning of the lease term, and the lease is a two-year agreement, then the car has an average depreciation of $500 per month over the cost of the term. Typically, a monthly lease payment is not as expensive as a monthly loan payment were you buying the same car.
One major aspect of a lease agreement is that the term of the lease is fixed. This means that, if for any reason, the lease must be terminated early, there is typically a significant charge added on to the cost of the lease. When considering leasing a car make sure that any conditions, like early termination conditions, are read over carefully and totally understood. At the end of the lease the person that has taken the lease generally returns the vehicle in good condition, and pays any end of lease costs that were initially put in the contract. Again, the contract should be read carefully in order to see what these are, if any. Be aware that there can be a significant charge if too many miles have been put on the vehicle during the lease.
The two most common costs for someone leasing a vehicle are additional charges for excessive mileage or for excessive wear. It is important that a person leasing the car keeps to the number of miles specified in the lease, or negotiates for a different number of miles in the contract when it is drawn up and signed. Also, it should be made very clear exactly what the company will consider excessive wear when the car is returned, and they should be clearly described in the contract.
Hopefully, this introduction has given some indication of who might be a good candidates for a car lease, and which people would be better off in purchasing a car.
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