Pros and Cons of Leasing a Car

Leasing a car provides some benefits that buying a car does not. But leasing a car also has some disadvantages over buying. It is important to understand the ramifications of buying and leasing when choosing between the two options.

Pro--Down Payment

Leasing a car usually requires a lower down payment than purchasing. Some leases do not require a down payment.

Pro--Always New

When leasing a car, you are always driving a new model car. After the car is driven for a few years, you can return it to the dealer and get another lease for a new car.

Pro--No Negative Equity

In a lease you are only paying for the time you are using the car rather than buying it, so you will never be in a position where you owe more than what the vehicle is worth.

Con--Vague Definitions

When leasing a car, make sure you clarify any vague terminology in the lease. Many leases charge you extra for "additional mileage" and "excessive wear and tear" but these terms may not be clearly defined.

Con--Early Termination Fee

If you have the need to end a lease early, expect to pay early termination fees. These can be excessive, so read your lease carefully before committing.

Con--No Customization

Any customization to a leased vehicle that would alter it in a permanent way is not allowed under a lease.

Con--Payments Forever

When you lease a car, you are essentially renting it for a specific period of time. This means you never own the car you are driving, so you will always have a monthly car payment as long as you lease.

Resources

• Guide to Leasing