Advantages and Disadvantages of Car Lease
- Affordable monthly payments. Since you are only paying for a portion of the car, you are entitled to a 30-60% monthly lease payment. This is lower if you compute a purchase loan having the same terms and the same car.
- No down payment. If you have a good credit record, chances are greater that you can lease a car without giving initial payments.
- More Car, More Often Options. Since monthly lease payments are lower than the buying it out in full cash, you have bigger chances of getting a new car often depending on the length of your lease contract. You can have as much as 2 cars in 4 years row depending on your contract with the car leasing company.
- Fewer maintenance fees. Since leased cars cover warranty over the leasing period, this enables you to spend lesser maintenance fees since the car is under warranty all throughout the leasing period.
- Lower Taxes. Unlike when you purchase a car in cash, leasing a car does not require full sale taxes instead you are only taxed on the portion of the lease value. The tax is equally divided into monthly payments as you are paying it in instalment basis.
As we have mentioned earlier, there are also disadvantages in leasing a car. Here are some of the disadvantages a person can incur getting a car lease rather than buying it:
- Early Termination Cost. If you decide that you don’t want to continue your lease anymore, chances of paying for the contract termination is very expensive, more than what you expect it to be that is why a lot of people end the contract as stated rather than terminate it before it actually ends.
- Little or No Ownership Entity. When leasing a car, you don’t actually build ownership or trade-in value. On the contrary, it is common that the value of the car in the market at the end of the lease is higher than the price purchase option as stipulated in the lease contract.
- Excessive Mileage Charges. If you exceed the mileage allowance in your car lease contract, chances are you will be charged $0.20 per mile. This means that if you have incurred a large mileage excess, chances are you are also allotted to pay more.
- Excessive Wear and Tear Charges. At the end of your leasing contract, the vehicle will be subjected to examination. If there are excessive scratches, dents or unrepaired accident damages, you will be charged accordingly since this will cause the vehicle’s value to depreciate.
Leasing a car has its attractive benefits to prospected customers. However there are also disadvantages to it that should be considered. There is also a big difference as to buying a car from leasing it that should be thoroughly weighed.