To lease or not to lease? This can be a fairly controversial topic that elicits some pretty opinionated feedback. Some people say it’s simply not a good financial choice. Others are committed to leasing and do so every few years. The truth is, it’s a personal choice you should make based on your own personal preferences and financial goals. Let’s take a look at six factors you should consider before deciding whether leasing a car is right for you:
- Mileage Restrictions — When you lease a car, most leasing contracts limit the amount of miles you can drive every year. For example, your contract may stipulate that you can only drive 15,000 miles per year. Going over could cost you more than was originally included in your budget. If you put a good number of miles on your car annually, or if your mileage is unpredictable, a lease might not be a good choice for you. But if your annual mileage is predictable and not too high, leasing a car is still a possibility.
- Down Payments — Leasing a car might require a significant deposit or you could qualify with no money down. As with any other financing endeavor, it depends on your credit qualifications. If you don’t have access to the down payment you need, a car lease may not be possible for you. Check with your lender before you decide.
- Insurance Costs — You’re required to carry insurance, whether you’re buying, leasing, or renting a car. Nothing new here. Research what kind of coverage is required before you commit to a lease. A leasing company could require you to carry certain levels of coverage on your insurance that may be more expensive that what you’re accustomed to if you do not normally carry the higher coverage.
- Fees — Be sure to read the fine print when it comes to leasing a car. Some dealerships charge extensive fees. For example, there might be a fee for turning in your car prior to the end of your lease. Take the time to read the contract very carefully, ask a lot of questions, and negotiate when necessary. Don’t be afraid to have someone come with you to read through all the paperwork. And don’t go into the deal assuming the worst. The reason so many people are committed to leasing cars is that there are great deals out there to be found. Some dealerships provide this service to their customers routinely without overcharging. Decide what you’re willing to pay for and look for a dealership that is highly recommended.
- The Difficulty of Getting Out of a Lease — Once you are locked into a lease, it could be very difficult to get out of it. If you have trouble making your payments, the dealership may not be flexible. Just like anything else, don’t commit unless you’re sure it’s the right financial decision for you.
- Repairs and Upgrades — How hard are you on your cars? Are you a fan of making specialty upgrades? Be sure and ask about the cost of repairs and your ability to make upgrades before you sign a lease. Some dealerships charge wear and tear fees for some kinds of damage. So if you’re prone to spills or not known for keeping your car in mint condition, this could be costly. Many dealerships do not allow upgrades to leased vehicles. If that’s the case, upgrades like custom paint or tinted windows would not be allowed. You would need to keep the car as close to the condition you leased it in as possible to ensure you don’t get charged for excessive damage. Knowing yourself and what you want is key to making the right choice.
Give us a call or stop by your local branch anytime to chat with a Personal Financial Representative and learn more.
Ultimately, most financial experts agree that buying a car is the wiser financial choice for the average consumer. But there is certainly a group of folks for whom leasing can be a great financial option that allows for driving newer and better cars for a low monthly fee. Their thought process is along the lines of, I will always have a car payment, so why not drive a newer car more often at a lower payment? Do your research and decide for yourself.