Is Car Leasing Right For You?
While car leasing will make sense for some, it will make no sense for others. As discussed in other posts, it depends on your lifestyle and needs. Let’s go through a few questions to see if leasing is right for you.
- Do you drive more than 12,000 miles (or 16,000km) per year? Lease contracts will limit the number of kilometers you can drive per year. While you can go over your allowance, you’ll be charged for any excess use.
- Will you want to end the lease term early? Vehicle leasing contracts are written to discourage early termination. If you want to terminate the agreement early and can’t find someone to take over your lease, you may have to pay penalties to get out of it. That typically means an early termination fee and you’ll have to pay all of your remaining payments on the vehicle.
- Will you want to make modifications or customize? When you lease a car it doesn’t belong to you. It belongs to the leasing company. If you make any modifications, like re-painting it or adding a supercharger, you’ll most likely be charged the cost to undo anything you’ve changed.
- Do you treat your cars well? Leasing companies want to ensure that you keep their vehicle in good condition. That means returning the vehicle with no more than “normal” wear and tear. You are responsible for any excessive wear and tear or damage to the vehicle, whether it’s your fault or not.
- Are you attached to the idea of “owning”? When you lease a vehicle, it’s owned by the leasing company. You have no ownership of the leased vehicle unless you choose to purchase it at the end of your lease.
- Do you have a lower credit rating? Leases typically require a small or no down payment. Since there is a lower risk to the lending company, you won’t need as high of a credit score to be eligible. If your credit score isn’t good, you may be flat out refused for a lease or may have to pay a higher interest rate or put money down.
- Do you like to drive your vehicle until it dies? If you enjoy the idea of having no monthly payments, traditional financing may be better for you. One benefits of leasing is that you’ll have a new car every 2- 4 years, but that also means that you’ll always be making car payments.
Summary
Leasing is best for people who plan on taking their lease to the end of the term. It’s good for people who know their lifestyle, don’t drive excessively, maintain their cars and have a fairly decent credit score.
If you prefer to drive your car until it dies, are looking at a career change or drive excessive miles every year, leasing is not for you.
