Why You Should Never Lease a Car
Leasing a car means using a car for a fixed period of time at a stated payment with no form of ownership included. The car must be returned at the end of the lease. In many leases you will have the option of buying the car at the end of the lease.
People who like to drive a new car every few years will usually pay less by leasing than buying a new one. Also, they don’t have to deal with getting rid of their old car — they just turn it in at the end of the lease period. As a result, many people lease in order to drive a more expensive car than they could afford to buy.
Although you may be eager to drive an expensive new set of wheels, consider the following disadvantages to leasing a car before you make your final decision:
- No Equity — your lease payments don’t go towards owning anything. If you look forward to paying off your car and owning it free and clear, don’t lease.
- You may pay extra – The lease states out how many miles you may drive per year; if you drive a lot and you fail to consider this, you could be paying a lot of extra cash at the end of the contract. Also, you’ll have to pay up for any damage to the car beyond normal wear and tear when you turn it in. In addition to that, If you decide to buy the car at the lease-end, you’ll pay several thousands of dollars more than if you had bought it initially.
- Insurance May Come Up Short – If you total the car or it gets stolen, your insurance will only reimburse you for the car’s market value, which might not cover what you still owe on your lease. You can buy extra “gap coverage” to protect against this and some lease deals include it automatically.
- You don’t have a car – This is pretty obvious. With a lease, you don’t actually own a car. When the contract is up, you have to give it back and you got nothing left for you.
- Stuck in a bad situation – If circumstances happen to change in your life, and you can no longer afford the lease payment, you will have a very difficult time getting out of your situation. Owing more money on your car than the car is worth is often referred to as being “upside-down”. It is not a good place to be!
The bottom line is this: there are too many risks to leasing a car. Many car dealers will give you all the reasons why you should lease a car. They will neglect to give you the reasons you SHOULD NOT lease a car. Don’t learn how to buy or lease a car from a dealer! In most cases you will come out ahead by saving up and buying less car than by leasing a new car.
