The Benefits And Downsides Involved In Car Leases Versus Buying Versus Purchase
Leasing a vehicle can be a great way to drive a car that you can’t quite afford, and avoid the depreciation of your vehicle over time. But car leases also have their downsides.
Mostly, the problems relate to the fact that the vehicle does not belong to you. When leasing, there is a contract that not only spells out the terms of the financing, but also what you can and can’t do with the vehicle. This includes modifying it in any way, neglecting it (usually there is a fee for cars returned in a not-maintained condition) and driving more than the specified number of miles per year.
While leasing a high-end car is cheaper than purchasing it, at least to start with, it is more expensive in the long run. This is because most cars will run for many more years than it takes to reach their value in loan or lease payments. Thus, long after you would have paid off your car, you will still be paying a monthly lease.
The benefits of leasing a car are fairly obvious– driving a newer, higher-end vehicle than you could perhaps afford to buy, monthly payments that might fit into your budget better than a large down payment would, and replacing the car every two or three years for a newer model, usually without greatly increasing the monthly fee.
Fees associated with breaking the lease can be very high, so be sure to know and understand this before signing the lease. Often, the fees are so high that not terminating the lease would be cheaper. However, if you avoid falling into this trap, the monthly payments will be lower than those of typical loan fees.
The end result of a comparison between purchasing and leasing a car is that leasing is cheaper in the short-term while purchasing is cheaper in the long run. But the benefits such as having a new model car at all times, or having lower monthly fees, might appeal enough to some people to make it worthwhile. Read all lease contracts carefully, however, as they have a reputation for being somewhat complicated.
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Feb282011
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