When it comes to the decision to get a new car, some people prefer to opt for lease. Lease offers you an opportunity to get a car without making the bulk payments involved in buying a new car. To some people, this is a good deal that affords them the liberty to change cars every now and then. Since this site is all about helping you make good financial decisions, its best to point out some of the reasons why lease is not the best option for you when it comes to getting a car.
Benefits of Leasing a Car
Leasing a car is not outrightly bad. There are some benefits you enjoy from leasing instead of buying a car. Some of the awesome benefits that come with leasing a car include
a. Opportunity to Use Cars You Can’t Afford:
With buying a car, you have to pay a bulk deposit and also some amounts money. On the other hand, a lease allows you to walk away with a car with just a small deposit. With that, you can enjoy a car you can’t afford on your normal budget.
b. Switch Cars At Will:
With a lease, you can easily return a car, do some paper works, pay a small amount of money and drive away with another car. In other words, lease allows you to change cars at will.
Reasons Not To Lease A Car
These are the reasons why you shouldn’t go on with your plans to lease that car:
1. It Is More Expensive In The Long Run:
On the surface, it may seem that buying a car is more expensive. That is because as a result of the bulk initial deposit and subsequent payments payments you get to make when buying a car. But when you actually sit down to calculate the cost of buying a car and that of leasing, you find out that it is much expensive to lease. This is true especially if you plan to lease the car for more than four years. That is in addition to other costs that come with lease which will be mentioned below.
2. Mileage Limits:
Another major reason why you shouldn’t consider lease when it comes to getting a car is because of the limits to mileage. There is a limit placed on mileage for cars on lease. Also, you pay cost for each mile you accrue with the. The amount you pay can go as high as 20 cents per mile depending on the leasing company. Also, for most companies, the limit for mileage is 40,000. You are not expected to exceed this and you get to pay damages if you do so.
3. Damages for Extra Wears
Most car leasing companies allow normal wears on leased cars. But once it except this, you are expected to pay for cost to cover damages. Be ready to cover these damages if you intend to lease your next car.
4. Payment is Made in Perpetuity
When you buy a car, you get to pay a certain amount regularly for a while and once you cover the primary cost of the car you stop payment. With lease, you continue to as long as your contract runs. There is no end to payments in a lease contract.
5. No Ownership
You can’t own a car under lease. That means that even after making payments for years, you don’t get to own the car. You can’t add it to your asset Column. What is the use of spending money for years on something you can’t own? It doesn’t make sense.
6. Consequences for Default
If for any reason you default in your lease payment, you can lose out on the balance.
There are other reasons why you shouldn’t consider leasing a car but these are some of the car reasons why. On the other hand, buying a car affords you the following benefits.
7. You Can’t Sell The Car
You can’t sell a car on lease because in law, you can’t give out what you don’t know. So, lets say someone offers to buy the car above the market value from you, you can’t sell the car since you don’t have right of ownership. On the other hand, you don’t have to stress yourself with details of how to sell the car. You simply return the car to the leasing company.
a. Ownership of Property
You get to own the car as long as the contract is not that of lease. As the owner, you can lease, sell or do whatever you want with your car.
b. No Worries on Mileage Limits
When you opt to buy a car instead of lease, you don’t have to worry on the issue of mileage limits. The car is all yours.
Finally, if your intent is to keep the car for a short term, may be 6 months to 2 years, you can opt for a lease. If on the other hand, you intend to keep the car for a long term, it is best to buy.