Advantages & Disadvantages of Leasing

Leasing is the process through which the use of an asset is obtained through a number of predetermined payments over a period of time. People lease homes, cars, equipment and many other things that they need or want. However, one should be aware of the advantages and disadvantages of this process before making any commitments.

Reduced Cost

Leasing can be attractive because it reduces the cost of ownership of items, ones that are often brand new. As a result, it can leave you with enough money to spread over financing several assets, as opposed to having enough to purchase only one.

Resale

If you are leasing, you don't have to worry about what to do once the asset is no longer of use to you or once you want a newer version. Once the lease period is over, the item is off your hands unless you decide that you want to buy it.

Lease Termination

If for any reason the lease is terminated before its predetermined period runs out--for example, you damaged the leased car--then there are additional charges that you must pay on top of the lease price.

Renting vs. Owning

The cost of leasing overtime can surpass the cost of buying. You are essentially renting the item and you never own it, even after you have spent a significant sum of money on it.

Qualifying

Qualifying for a lease program can be difficult for those who have a bad credit or employment history. These factors will not matter as much when you are buying something.