If you want to lease your next car, think again. Before presenting my point of view, we will discuss the top 10 reasons not to lease a car in this post. If you also want to know why not lease a car, this post is for you.
However, a car lease might give you a brand-new car for a low monthly payment, but what’s not to like for the most? The only benefit of leasing is that you can drive a car, but with a lease, you will never truly be able to own that car; for that, you’re making monthly payments. Also, wrong leases might look very tempting sometimes, especially if you have a lower budget. Moreover, leasing a car allows you to drive a brand-new shiny car for typically a lower rate than a car loan, but leases are the devil in disguise.
If you’re interested to know those 10 reasons not to lease a car, then read this complete article to save your money from penalties and taxes.
How does the leasing of a car work?
Car leasing is similar to other methods of vehicle finance. However, the dealership sells the car to the leasing company, and you “rent” the car from the leasing company.
Almost everything is the same as when you buy a car, but often you can lease for less money upfront and less each month.
But you can only lease a car for a certain time (usually 3-6 years). And when your lease is up, you can either return the car to the dealer or purchase it completely.
Now that you know what leasing is let’s talk about why it’s not a good idea most of the time.
What are the facts behind leasing a car not being a good idea?
Don’t Skip the following Facts about leasing a car.
- When you lease a car, the leasing company buys it from the dealer and gives it to you as a rental.
- At the end of your lease, you can either return the car to the dealer or buy it.
- Before making a final decision, you should consider the lease agreement’s rules.
Leasing a car is just one more way to pay for a car. Therefore, the dealership sells the car to the leasing company, which then rents the car to you. Also, the process is very similar to buying a car, but when you lease, you usually pay less upfront and less each month.
But you can only rent a car for a certain number of years, usually between two and three. At the end of your lease, you can either return the car to the dealership or buy it.
In this article, we’ll talk about the top 10 reasons why you shouldn’t lease a car and think about whether it’s better to buy or lease a car.
Let’s dive into the 10 reasons not to lease a car.
One lease comes with a mileage limit, so if you go over that mileage limit in any given year, then you will be penalized and typically taxed with a pretty hefty fee. Also, even though you are paying a monthly payment which I mentioned earlier – you don’t own that car at the end of the day, and that is why for the most part, you will be better off buying that actual car with buying.
#1 Reason: Distance Restrictions
As was already said, the mileage limit can be a worry. Most car leases limit the miles you can drive to between 10,000 and 15,000. Additionally, this is fine for most drivers, but it can quickly become a problem for some.
Driving may become stressful if you’re constantly tracking how far you’ve driven, as might happen on lengthy commutes or cross-country business trips.
However, some drivers like to take regular road trips or staycations, but if they’re getting close to their mileage limit, they may have to stay home, take public transportation, and only drive once their lease contract is over.
Even if you don’t think you’ll drive much, a mileage limit makes you feel less independent and free. Also, you shouldn’t have to sign a contract that tells you where, when, and how far you can drive, so why would you sign one that does?
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#2 Reason: You hate getting a new car every few years because you get too attached to your current one.
Some people get very attached to their cars and never want to give them up. Moreover, they give their cars names like “Rover” or “Daisy” and talk to them while driving. Also, they look at pictures of all the good times they’ve had together, and the idea of selling to these weirdos is like giving up your kids for adoption. GET-A-GRIP!!!
Cars aren’t real, they don’t have feelings or emotions, and if you upgraded them, they wouldn’t be sad and depressed or have mental health problems. Herbie, Kit, Chitty Chitty Bang Bang, and Bumblebee are not real cars. Therefore, they are only in movies. You can move on with your life once you understand this…
#3. You spend A LOT of money on something you don’t own.
When you lease a car, you pay a lot of money every month to be able to drive it. You are financially and physically responsible for the car, but it belongs to the car company.
It’s like renting a car from Hertz or Budget, but for 3–6 years instead of 3–6 days.
And the payments never stop. Except if you purchase the car at the end of the lease. But if you do that, you’ll spend a lot more on the car than if you had just bought it.
The car I leased had a sticker price of around $24,000. For 39 months, I pay $332 each month. At the end of my lease, I will have paid under $13,000 (that’s a lot just to rent a car)!
(Let’s understand with the help of an example)
My lease says that if I want to get out of it, it will cost me $15k. Now, I want to talk to them about this when my lease is up, but they’ll likely want $15k. If I bought it out, I would pay $28,000.
That’s $4,000 more than what I would have paid if I had just gotten a loan for the car from the start.
When you buy a car or get a loan to pay for one, your payments will end at some point. Then you can save or spend that extra money however you want. And you can keep driving the car as long as you want!
So your total cost over the time you own it goes down!
#4 Reason: You must take good care of the leased car.
Since you are technically “renting” the car, you must ensure it stays in good condition. If you get into an accident, you have to fix any damage before taking the car back to the dealer. The car dealer also decides what kind of condition is acceptable, and if your car is in bad shape, you may have to pay more money.
#5 Reason: Costs of maintenance
When you lease a car, you don’t own it, but you are still responsible for all repairs and maintenance. One of the biggest problems with leasing a car is that you don’t own it, but you are solely responsible for its health and value.
Even if you wreck the car in an accident, you will still have to pay the rest of the contract. However, there are stories about leased cars that broke down in the first month or two, but the owner still had to pay for them because the contract was for two years.
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#6 Reason: Major penalties are assessed for contract termination.
It’s possible that you’ll have trouble paying for it or that you’ll regret buying it. What should you do if you’re in this kind of situation? A car salesman may try to sell you a leased car because it has lower monthly payments, but they won’t tell you about the cost of early termination fees.
One of the most common and most expensive fees is that the buyer has to pay the rest of their lease all at once. This can be a costly price, and car leasing companies have strict rules about how the money has to be paid back.
#7 Reason: A new vehicle cannot be purchased using the proceeds from the sale of the old one.
As was already said, you can’t sell a leased car. However, this makes it harder to get money to buy another car, and you may find yourself stuck in a cycle of leasing cars. Also, you can only buy something better if you have an asset to sell. Moreover, when you lease a car, you end up with almost the same amount of money you started with. Because of this, you may have to rent a car more than once.
#8 Reason: You end up paying more interest.
Even though the monthly payments for an auto lease are lower than those for a typical car loan, you will pay a lot more interest. However, this goes back to the main problem with leasing a car. You don’t own the car, and if you don’t own something, you can’t use it to get a loan. Since there is no collateral, lenders have to charge higher interest rates to make up for it. Most of your monthly payments go to interest, which is never a good way to spend money.
#9 Reason: At the end of the lease, you have to return the car with nothing to show for it.
As we’ve already discussed, when the lease ends, you can either return the car to the dealership or buy it out. Remember that when you return the car, you won’t get anything back. You give it back, and the company sells it to someone else. Additionally, they keep your money, though. When you own a car, you don’t have to do this. On the other hand, when you’re ready to get rid of your car, you can sell it and keep the money.
#10 Reason: You like to pay more for road tax than your smart neighbor.
I’m grasping at straws to add this one, but the truth is that it’s hard to come up with 10 reasons why you shouldn’t lease a car. When a car company upgrades its production, makes small changes, or gives a car a whole new look, one of the main goals is to reduce CO2 emissions. If a car has lower emissions, the government gives it a break in the form of a lower road tax. Did you know that if your car has a CO2 rate of 255 or more, you will pay more than £2,000 in road tax in 2020? For less than that, you could lease a new car, which would include the road tax cost.
Conclusion (10 reasons not to lease a car)
In this post, we have discussed the top 10 reasons not to lease a car. Moreover, we hope that this blog will be helpful to you and you will get all the definite reasons not to lease a car again. Both buying and leasing a car have their pros and cons. Sometimes, it takes time to decide whether to lease or buy a car. If you lease a car, you have to follow certain rules;
- Indicated yearly mileage limit
- No servicing included
- Maintenance coverage can be bought for an extra fee
- When the car is brought back, the leaseholder is responsible for any damage.
When compared to buying a car, leasing one comes with more rules. Also, it’s clear right away that this car isn’t yours; you’re just renting it.
For some, leasing is worth the lower price at first. But not owning the car you’re driving can cause many problems. When you rent something, you don’t get any of the benefits of owning it, but you still have to deal with all of the risks.
FAQs (10 reasons not to lease a car)
What’s a Better Option Than leasing?
The best thing to do is save up and pay cash for a slightly used car. If you can’t pay in cash, that’s fine! You can save up enough money for a good down payment and borrow the rest.
Make sure you look around and compare different places’ interest rates to find the best one. Credit unions are a good place to start because their interest rates are usually the lowest.
What can you do if you already have a lease?
You can post your lease on a few websites, and anyone interested could take over your lease and payments. Moreover, this is a lease transfer, and you can do it on Swapalease and LeaseTrader.
You could finish paying your rent early. Which is not a good idea because it would be expensive.