For most people, leasing a car is a bad deal. Once again, I say most people, because there are certain circumstances when it could make sense, but that doesn’t usually apply to individual car buyers. Here are the main dangers of leasing a car in today’s market.
Dangers of Leasing a Car
Leasing Is More Expensive Than Buying
Leasing is more expensive than buying, plain and simple. Your monthly payment may be a lot lower than your car payments if you purchased, but your total payment will be higher.
If you plan to buy a car, you should be planning on holding onto it for as long as possible. You should aim for it to either die or be too costly to repair any further. Or, you should aim for replacing the vehicle when it simply no longer meets your needs (maybe you have a growing family).
Either way, after about 3 years, total cost of ownership of a car will typically be cheaper than leasing a car. And, then if you extend that out to 5, 7, or even 10 years, the costs continue to drop significantly.
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You Have To Pay Fees When You Lease A Car
Another drawback with leasing is the fees associated with it. The biggest one that gets lease holders is the mileage fee. Most leases allot 10,000 to 12,000 miles per year. And if you exceed that mileage limit, you are subject to and 18 cent to 21 cent per mile charge.
If the charge is 20 cents, and you drive an extra 1,000 miles per year, you will pay an addition $200 each year when you return the car. Just think about how fast that fee alone can quickly add up if you go over the limit.
Condition Of Your Leased Car When You Return It Matters
The condition of your leased car matters a great deal when your lease is up and you try to turn in your car to the dealership. You are allowed fair wear and tear, but you are subject to the dealership’s interpretation of how well you have kept the car up. You can find yourself in for a headache in the end when you disagree.
You Usually Cannot Get Out Of A Lease Early
Finally, if you have a lease, you really cannot get out of the lease early without paying hefty fees. There are now websites and services that help you transfer your lease if you really need to get out of it. But, even those services charge a fee of over $100 to get the paperwork done.
When you add up all the costs, leasing is often not a good choice compared to simply buying a car the car outright. You lose a lot of rights that you would have had had you been the actual owner of the car and not a long term renter.
Do you lease a car? Are you worried about the dangers of leasing a car? Why do you lease?