What Are the Disadvantages of Leasing an Automobile?

Leasing an automobile may have some advantages, but it is very important to be aware of the disadvantages prior to entering into an agreement. Once you have carefully thought through the advantages and disadvantages of leasing, and compared these to your personal situation, you will be in a better position to make an informed decision.

Payments

When leasing a car, you are making payments on a vehicle that you do not own and will not own. Leasing allows you, in most cases, to pay a lower monthly payment than you would pay if your were financing the car for purchase, but when the lease is over, you do not own the car, and you cannot trade in the car toward another. You have paid every payment and have built up zero equity. At the end of the lease term, you may have the option to purchase the car and own it for a lump sum payment. This lump sum payment is often thousands of dollars.

Miles

When leasing a vehicle you agree to not go over a set mileage. Going over this set mileage can cost you a significant amount of money as you are charged a fee per mile. Before agreeing to lease a vehicle, you should be certain you will not go over the set mileage.

Damages

Leasing a vehicle leaves you susceptible to pay for damages to the vehicle. Normal wear and tear is a very subjective finding, and what you consider normal wear and tear may not be what the leasing company considers normal wear and tear. Any dent, damage, stain or excessive scratching could be your responsibility at the end of the lease.

Early Termination

Terminating a lease early could result in a stiff penalty. Before entering into a lease, you should be as certain as possible that this is the car you wish to have until the lease has ended. You will not have the flexibility to trade in to purchase a new vehicle as you do when you buy a car.

Maintenance

You are required, by the lease terms, to perform all the recommended maintenance on the vehicle. The cost of the maintenance is out of your pocket, and you should keep all receipts, and have proof of the maintenance. Failure to do so could result in penalties or a warranty repair being denied. This recommended maintenance can be oil changes, tune ups, belts changed or any other maintenance that is recommended by the vehicle manufacturer. Review the recommendations prior to signing a lease so you know what you are agreeing to.