Is Leasing a Car a Good Deal?
Written by Lee Wyatt (last updated August 23, 2013)
There is an old play on words that leasing a car is more properly termed "fleecing a car," but is this really true? Is leasing a car a good deal? While many people would tell you that it isn't, there are just as many people who would tell you that it is. In reality, the decision as to whether or not it is a good idea, or even a good deal, is one that only you can answer. However, there are a few things that you should consider, at least if you want to make an informed decision.
- New car. It is definitely fun being able to get a new car, and with leasing a new car you will be able to have that feeling almost all the time. Basically at the end of the lease you will be able to get a new car, so you can honestly look forward to getting a new car every couple of years or so.
- Contract doesn't change. Unfortunately, the contract that you sign when leasing a car will never change (that is unless you lease a new car). This means that even if you get into an accident and it is totaled you will be responsible for the full lease price. It really doesn't matter if you don't get back the full price from your insurance, you will still need to pay back the remainder out of your pocket, so be careful.
- Less stress. One of the big bonuses of getting a leased car is that it is always new. This means that it is always under warranty, and so the vast majority of issues that crop up will be taken care of. In addition, since it is a newer vehicle this also means that it is less likely to have any maintenance issues.
- Limited use. Most leases have a limit on how far they can be driven over the course of the lease, and all leases have a time limit on how long you can use the car. For example, if you signed a two year lease, chances are you can only drive about 24,000 miles in it. Anything that is over that mileage will mean an additional monetary penalty that you will be responsible for.
- Great for business. If you are using the leased car for business, due to you being self employed or owning your own business, you can use it as a business expense.
- Still have ownership hassles. Even though you don't technically own the vehicle, you will still have to pay for out of warranty repairs. In addition, since you are only leasing the vehicle you can't personalize it like you would a car that you are buying. This means that you can't paint it, reupholster it, and so on. What you have is what you get.
- More bang for your buck. Typically when you lease a vehicle you can get more "bang for your buck." For some reason, if you aren't qualified to purchase a particular type of car, you may be qualified to lease it. In addition, by leasing a car, your payments are typically smaller than they would be if you are buying it.
- It's not your asset. One of the biggest things to remember is that you do not own the car. This means that you cannot list the leased vehicle as an asset for any reason, since it still technically belongs to the dealership and not you.
Now that you know a little bit more about both the good and bad of leasing a car, you may be able to make a more informed decision. While it is true that there are a few drawbacks to leasing a car, there are also drawbacks to buying a car as well. For some reason, leasing a car can work for some individuals, and if you are one of them, go for it.