We researched the ins and outs of leasing a car, and here is what we found:
At some point, everyone faces having to replace their vehicle. When shopping for a car there are a lot of considerations such as buying a new, used, or perhaps you’ve decided leasing is the option for you. Let’s talk about the advantages and disadvantages of leasing a vehicle to see if it’s the right choice for you. Start by considering your lifestyle, budget, and long-term goals, and if everything aligns with the conditions, rules, and guidelines of leasing a vehicle, head on over to the dealership to make your deal.
Below are the advantages versus the disadvantages of leasing a vehicle:
Advantages of leasing
- You will always drive a new vehicle. New vehicles tend to have the latest safety features and are covered by the manufacturer’s warranty. Some lease agreements also include free oil changes and other routine maintenance.
- You get more for your money. Leasing offers lower monthly payments compared to purchasing the vehicle.
- At the end of the lease, there is no hassle of a trade-in. Simply return the vehicle and start over. You also have the option of purchasing the leased vehicle.
- There could be tax advantages of leasing for business owners. Talk to a trusted tax professional to see if leasing could help.
- Peace of mind. You will rarely spend money on anything but gas and insurance. There are typically no repairs to think about. All major repairs are covered by the warranty.
Disadvantages of leasing
- You will always have a monthly payment. Once you finished your lease, if you decided to lease again, those monthly payments will continue as well. Over time a lease will cost you more compared to purchasing a vehicle, paying the loan off, and keeping it for a while.
- Miles driven is part of any lease. Calculating your miles is crucial when looking at a lease. If you go over the miles, the car dealerships can charge on average $.15 to $.20 per mile over the agreed-upon mileage. On the other side, you do not get credited for unused miles. If your commute is local or if you work from home, you may decide that a lease would work better for you. However, a longer commute or if you tend to put more than the allotted miles on a vehicle each year, a lease may not benefit you.
- When you have completed your lease, you are obligated to return the vehicle in reasonable “showroom condition.” Although there are wear and tear allowances, returning a lease that isn’t in tip-top shape can result in extra fees and penalties.
- What happens if you decide that you don’t like your new lease? Or if you cannot afford the payments anymore? Well, you do have the option to return the vehicle. However, there are usually penalties and fees involved if you need to break your lease. These fees can add up to thousands of dollars.
- Registration costs on a new car are always higher [unless you live in a state that doesn’t have registration fees]. You will never get to see a lowered registration costs. As the third year rolls around and the fees have decreased considerably, it will be time to trade in for a new car which will bring that registration cost right back up to its highest point again.
There are several factors that determine if a lease is right for you, and researching your annual miles, budget, and lifestyle are all considerations to think about when thinking about a lease. If you need help deciding if leasing is for you, we can help! Call Carrielyn Reynolds, Financial Education Coordinator at (207) 660-6267 to set up an appointment.