why you should not lease a car
Leases offer lower monthly payments, with less money required upfront, and allow you to drive a new car every few years, without the hassles of major repairs or having to sell or trade it in when you re ready to move on. The big tradeoff is that you don t own the car; when the lease ends, you ll have to return the car and find a replacement. Another downside to leasing is that you ll have less freedom than if you d purchased the vehicle. You won t be able to add features or customize your ride. When you sign the lease contract, you ll be limited to driving only a certain number of miles. Mileage above that limit will be subject to a penalty fee. You could also be subject to fees if you fail to properly maintain the car during the lease. If you think you ll drive more than the typical lease limit, you can negotiate for a higher mileage allowance. This will up your monthly payment, but be cheaper in the long run than paying fees for going over the limit. For example, if the warranty covers 12,000 miles a year, you can negotiate for an additional 3,000 miles a year without penalty. Autotrader. com site editor Brian Moody says that if you need more miles than that, you re better off. Leasing makes the most sense for someone who enjoys driving the latest model, has little money for a down payment, doesn t want to worry big repairs or other risks of long-term ownership, or is expecting a big lifestyle change in a couple years say, starting a family or moving to another country.
Kelley Blue Book s Brauer adds that if your business or corporation will be financing the car, it may also make more sense to lease. Typically only consumers with will qualify for a car lease, so if your credit is less than stellar, buying may be the only option. If you qualify for and decide to lease, never lease for longer than the length of the car s warranty, so that you run little or no risk of having to pay for major repairs. Most cars have warranties up to 36,000 miles or three years. Luxury models often have longer warranties, up to 65,000 miles. Every lease agreement is different, so look closely at the terms to avoid hefty fees or being on the hook for expensive repairs to a car you ultimately don t own. Read next:
Should I Buy Or Lease A Car? Deciding whether you should buy or lease a car is a very important decision that can have a long-term impact on. ItБs important that you donБt end up with a car that you cannot afford down the road. LetБs take a look at each option in more detail.
The concept behind leasing is that you are basically renting the vehicle for 2-3 years. Unlike buying, your monthly payment is not determined by the full purchase cost of the vehicle. б ItБs nice to have that new car feeling every few years, isnБt it? After a few years, it can be so convenient to just turn the car back in after it starts to age a little. Or, if itБs the perfect car, you may decide to keep it and continue to make the payments. Leasing generally results in lower maintenance and repair costs, and you are not investing in something that is depreciating in value. On top of all that, your down payment and monthly payment will probably be less than if you decide to buy the car. However, leasing comes with mileage restrictions, Бwear and tearБ policies, and the fact that you wonБt have a tangible asset once your payments end. For some, leasing is a viable option. ItБs also nice to actually own what youБre driving and know that one day you will have it paid off. If your car lasts long enough, your budget will thank you because you will no longer have a car payment every month. But wait - assuming that you will be financing your vehicle, itБs important to understand the of the deal.
What is the interest rate on the loan you are being offered, and what is the term of the loan? ItБs very common to focus on only monthly payment, but it will cost you much more in the long run if you finance the vehicle for 60, 72, or 80 months rather than 24 or 36 months. In addition, all cars depreciate in value Б which means that in 4-5 years, you may still have a car payment but the re-sale value will be modest at best. б Also consider the maintenance costs on an older vehicle. ItБs not uncommon for some major repairs to be necessary at the 100,000 mile mark. However, if your car has been maintained well and has good re-sale value, you might be able to recoup some of your costs if you sell the car. Buy or Lease? Most experts agree that the cost of buying and leasing is about the same for the first few years. There wonБt be many repair costs and the various fees and insurance costs come out to about the same. The difference starts after the new car is paid off. Will you have your car for a few years after your car loan is paid off? If so, it typically makes sense to buy the car rather than lease. Check with car review publications to make sure that the car you want will last beyond the years that youБre financing it.
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