The Disadvantages of Leasing a Vehicle

Leasing a car can be appealing because monthly payments are usually lower and vehicles quickly lose value after they are purchased. Yet the potential cost of leasing a vehicle should not just be evaluated in terms of a monthly payment. People who lease cars can face significant additional costs if they exceed their mileage limits, damage their cars or terminate a lease early.

Lack of Ownership

Leasing a vehicle does not provide the advantages of ownership. People who keep their cars for about three years or more eventually own them and are free of car payments. Purchased cars offer owners more options when it comes to replacing vehicles as well. For example, an owner may choose to keep an older vehicle that is paid off because his income has suddenly declined. People who lease vehicles do not have such flexibility, since lease payments continue no matter what financial troubles befall them.

Mileage Limits

Leased vehicles can be expensive for people who put a lot of miles on their cars. Lease agreements often require people to pay an extra 12 to 15 cents for every mile they drive over an agreed upon limit. Preset mileage limits usually range between 12,000 and 15,000 miles per year. If you know in advance that you will exceed that range, you can add more miles to your lease contract at a discounted rate. Yet you will still have to pay about 10 cents for every mile you add.

Damage Fees

Companies that lease cars want customers to return their vehicles in good condition so they can sell or lease them to someone else. Therefore, leasing is not the best option for someone who is not meticulous about keeping the interior and exterior of a vehicle clean and free of damage. Lessees must pay for any damage to a vehicle that the leasing company sees as exceeding normal wear and tear. Modifying a leased vehicle by adding custom parts also can be a hassle because the parts have to be removed before the car can be returned to the leasing company.

Early Termination

Terminating a vehicle lease early can cost you as much as six months of payments, depending on the terms of your contract. That is one reason car leases are not the best option for people who frequently relocate or who are not sure how long they will be living in the same area. Relocating would require terminating a lease and would likely wipe out any savings gained from a contract that included a low down payment and low monthly expenses. Lessees who cancel early may have to make all remaining payments minus vehicle depreciation costs that have not yet occurred.