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While leasing a car offers benefits such as lower payments and the ability to upgrade to a new car every few years, there are specific drawbacks that can offset these benefits.
Leasing
According to USLegal Definitions, a car lease allows you to drive a car while only paying for the depreciation value during the time you are driving it. Unlike a loan, your payments do not contribute toward ownership of the vehicle.
End of Lease
At the end of a lease, you are required to turn the car in or buy it. If you cannot pay cash, you forfeit the car or take out a loan to finance the same vehicle you have been making lease payments on.
Early Termination
According to LeaseGuide, early lease termination often costs more than people anticipate. Depending on the amount left on the lease, early termination can cost thousands of dollars.
Mileage Restrictions
If you own a car, you can drive it as much as you want. Lease agreements will restrict you to a certain number of miles, usually between 12,000 and 15,000 per year.
Wear and Tear
According to to the Digitals Federal Credit Union's consumer education program, the leasing company charges you for excessive wear and tear when you turn in the vehicle. "Excessive" is defined by the leasing company.
Source:
StreetWise: Auto Leasing Guide
US Legal Definitions: Motor Vehicle Lease Law and Legal Definition
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