Want to drive a new car? Well, if you really want something new and not used, you have two options: buy or lease. If you’re considering leasing a vehicle, here are the advantages and disadvantages of doing so.
In many cases, you don’t need a down payment at all for leasing a vehicle. If you do, it’s usually very small, especially compared to the down payment you’d need to have for a new vehicle. Since there are less up-front costs, leasing is an attractive option for many people who don’t have enough savings to spend on a down payment for a new car.
When you’re leasing a car, your monthly payments will be lower than if you were to buy a new one. If you can’t quite afford the monthly payments of a new car, leasing can allow you to drive a newer vehicle with less monthly costs. You don’t have to take out a loan for it, so you won’t have to pay interest.
Because monthly payments are lower, you may be able to drive a higher-priced vehicle than if you were to buy a car. If you can only afford so much money per month on monthly payments, the money will afford you a nicer car for leasing than for buying. You may be able to drive a car you love but couldn’t afford to buy.
When you lease a vehicle, it’s usually a late-model car with very few miles on it. Because it’s so new, you’re less likely to have any major problems with it during the time of your lease. If you do have any problems, it will likely still be covered under the manufacturer’s warranty.
A disadvantage to leasing is that you’ll never stop paying monthly payments. Over time, if you only lease vehicles, you will end up spending more on monthly payments for leasing than you would have spent to buy a new car. If buying a new car is a financial option now, it may be a better way to spend your money.
And since those monthly payments go on forever, and you’re only borrowing the vehicle, you’ll never have ownership over it. It will never be your car, so you can never recoup any of the cost by selling it or trading it in for a future car. You just give it back to the dealership, and start the process again. Again, if possible, it’s a better investment to make monthly payments on something you’ll one day own, not just give back.
Just because you have lower monthly payments doesn’t mean there are no other fees or costs to worry about. If something breaks on the car that isn’t covered by warranty, it’s your job to fix it. If you drive more miles than you were allotted, you’ll have to pay for them. And if you want to get out of your lease early, you’ll end up paying enormous fees, usually as much as if you were to just finish out the lease.