Leasing Pros and Cons
Advantages of a Car Lease
- Lower monthly payments (30%-60% lower than loans)
- You only pay for depreciation during the term
- Great way to establish credit
- With lower payments, you can get more car for your money and drive a new one every few years
- Fewer maintenance headaches. If your lease term coincides with the manufacturer's warranty, major repairs are covered by the warranty
- Less up front cash required. Supposedly. Should require little or no down payment, but some dealers require $2,000-$7,000 down
- Just walk away at the end! You turn in the car, pay a disposition fee, and walk away
Disadvantages of a Car Lease
- Selling price is often full MSRP. Some dealers try to hide this and divert your attention to low monthly payments
- Confusing finance charges. Dealers sometimes refuse to disclose the money factor/APR to you or even lie to you about it
- Mileage limits, often as low as 10,000 that are too constricting, unrealistic, and not sustainable by most people
- Fees to get in, fees to get out. Nearly all have $500-$700 Dealer Acquisition fees plus $400 disposition fees at end of the term
- Higher insurance costs.
- If you lease the car you may not get the rebate. If you are eligible then make sure it's part of the deal
- Long-term cost is more than the cost of buying because of all the fees
- Excess wear and tear clauses: They often nit pick when you bring the car back, finding ways to keep your "refundable security deposit" for excess wear and tear
- Some dealers refuse to itemize your trade-in. Dealers are not required to itemize trade-ins, buyers who trade in, may not get credit for it
Watch Out for Mileage Limits!
Most leases sent in by our visitors have a limit of 12000 miles/year, but I am seeing too many leases with ridiculously low 10,000 mile/year limits. Many people end up owing thousands in mileage penalties at the end. Some dealers try to trick you into buying your excess mileage ahead of time to "protect yourself" from these penalties. This scam is icing on the cake for them because if you don't use those extra miles that you paid extra for up front, you don't get your money back. Don't fall for this scam.
You Should Not Lease If
- There is a chance you might have to end the lease early
- You are upside down on your current car
- You plan to have kids next year and will need a different car
- You drive more than 12,000 miles a year
- You plan to move out of state. Many leases restrict you from changing states
- You mistreat cars, you'll pay dearly in excess wear and tear fees at the end
- You want to customize your car
- You don't completely understand leasing when you finish reading this guide
Competitive Quotes Get You the Best Deal
Now that you understand the pros and cons of leasing you are ready to make your decision. If you have decided to lease this guide will teach you how to get the best deal and not get ripped off. The way to do this will be by shopping around and negotiating. Sounds simple but there is much more to learn!