When you need to get a new car, you have the option of either buying or leasing one. Leasing is renting a car for a set period and number of miles. You will need to make monthly payments for that period. Leasing may seem like a great option, especially if you don’t have the money to purchase a vehicle at the moment. However, there are some disadvantages that come with it.
1. The Mileage Is Limited
When you lease a car, part of the agreement is that you have to limit your mileage to between 10000 and 15000 miles a year. Should you exceed this, you will have to pay a penalty for every extra mile. For most companies, this is between 25 and 30 cents per mile. If you intend to use your vehicle a lot, this can be very disadvantageous.
2. Insurance Is Costly
Most insurance companies will charge you more on a leased vehicle than they would on a vehicle that you own. Plus, the dealership may require that you take out the higher level of insurance cover on liability, which is way more expensive. When you think about it, you’re better off just buying a vehicle.
3. Leasing Is Expensive in the Long Run
According to statistics, you end up paying 60% more when you lease a vehicle compared to when you purchase one by taking out an auto loan. Apart from the monthly payments you will be making, there will be additional fees. For instance, you will pay an acquisition fee while taking it and a disposition fee when giving it back. Plus, some leasing companies charge extra fees for excessive wear and tear on the vehicle. Despite the vehicle not being yours as well as your monthly fees, you still bear the cost of keeping it in good condition.
4. You Can’t Customize the Vehicle
You’re not at liberty to make the vehicle look however you want it to look. This means that you cannot add any accessories or customize the paint and the engine to your liking. If you do, you need to undo the changes before taking it back. The leasing companies require that you return the vehicle as it was.
5. Termination can be Complicated
It can be very difficult to terminate a leasing contract early. When you do, you will be expected to render heavy penalties. This is disadvantageous because if you do not like a vehicle, you can’t simply take it back and get another one without heavy cost implications. On the other hand, if you want another vehicle, you can always put it up for sale or trade it in and find one that you prefer.
Before you decide to lease a vehicle, you have to consider the pros and cons, and see if you can bear the cons. That way, you will face no surprises and have no regrets in the long run. Additionally, you need to understand the different types of lease contracts, and choose what works best for you.