What are the advantages and disadvantages of car leasing?
Car leasing has it’s advantages and disadvantages. Here is a summary:
– Get new car every 2-4 years, with latest features and safety equipment
– Lower monthly payments
– Usually no down payment
– Car is always under warranty
– Lower sales tax (in most states)
– Avoids used car selling/trading hassles
– Automatic GAP insurance included (most leases)
– Low payments doesn’t build owership equity
– Difficult to get out early – best if completed as scheduled
– Must keep car is good condition, or pay at end
– Must drive only average miles (about 15K/year) or pay at end
– Extra fees at beginning and end
– Not allowed to make modifications to car
– More complex, hard to get good deal if you don’t understand how it works
Car leasing is great for some people, particularly for those who take the time to understand how it works and learn how payments are calculated. If you normally trade cars every 2-3 years, drive average miles, and take good care of your cars, you can benefit from leasing.
Leasing is not so great for people who don’t understand it, have an unstable lifestyle, are likely to want to end the lease early, don’t take good care of their cars, and can’t predict the number of miles they will drive.
Car leasing might be the right answer for first time car buyers — but maybe not.
See LeaseGuide.com for additional information, advice, leasing kit, and lease calculators.