When many people realize that they suddenly need a new car the first idea that probably pops into their head is where they can buy a new vehicle and how on earth they are going to afford such a huge expense. There is, however, an alternative that is easily accessible for everyone and won’t break the bank from day one. This is car leasing.
This option continues to gain popularity in today’s system and is a great option for people that would like to drive a new car without having to dish out the total expense or commit to its ownership. Instead, you pay a monthly fee for a time as per the contract which is usually somewhere in the range of two to four years and then you can return it to the dealership.
But is this the right option for you? How can you know whether leasing matches your needs or not? Follow along as we walk you through all the pros and cons of car leasing so that you can make an informed decision regarding your next vehicle.
Let’s dive into the huge advantages that car leasing can bring to you instead of buying a car.
Knowing what we pay each month is crucial to calculating what we can afford and what we can save. When you purchase a vehicle you have monthly car payments that last until the debt is cleared.
This is similar to car leasing but there is a big key difference. When you lease a car, the payments are much less because you are only paying for the car depreciation during the period of your lease.
Whilst you may have to take a loan or save up to be able to afford a downpayment on a purchased vehicle car leasing is much more accessible to everyone. This is because most companies offer requests for only a very small downpayment or sometimes even no downpayment at all.
This means that if you do not have a ton of funds at hand, or don’t have enough for a Lamborghini Huracan Tecnica, you can still likely afford to lease it.
Some car repairs can quickly build up and make you question whether the car was really worth it in the first place. Or maybe, the costs are so substantial that you can’t afford to make the repairs and end up without a car. This is not a problem with car leasing.
Usually, they come with a manufacturer’s warranty which will cover all your needed repairs and maintenance during the period of lease which means that you do not have to fret about the additional costs of running the vehicle.
Lastly, one more benefit is that every few years depending on your lease period, you get to return the car you are driving and get a brand-new one. This keeps you at the forefront of the latest models and innovations without all the hassle of having to sell your depreciated vehicle and then go buy another one. It’s the simplest and easiest way to enjoy the most modern and luxurious vehicles every couple of years.
So now we know what’s good. What about the downsides? Let’s take a look.
Unfortunately with a car lease, you do receive a limit on your mileage. This determines as per the car and contract how far you can drive within the lease period. Whilst this is a reasonable amount, if you are planning many long-distance road trips then this may not be the best option for you.
This is because, if you exceed the set mileage laid out for you, you will have to pay additional fees which quickly build up in cost if you have gone a lot over the limit.
Equity refers to the investment made and the physical property that you own. Leasing a car is basically the same as renting something and therefore the vehicle is never technically yours and cannot be used as equity for loans. It also cannot be sold at any point since the leasing company retains ownership over the vehicle.
When you come to the end of your leasing period there can be additional fees on the car due to wear and tear. If you take much pride in the care of your vehicle this likely won’t be a problem but otherwise, these costs can build up and add to the overall expense of car leasing.
Finally, whilst you pay less per month it is not necessarily the most cost-effective long-term option. This is because leasing requires that you always have a car payment whereas purchasing means that eventually one day you may pay it all off and not have to pay anymore. Obviously, however, the car you pay off will not be new any longer making leasing still an attractive choice.