Car leasing is a viable practice in the automotive market both in the U.S. and all over the world. It basically affords consumers the chance to pay for a car monthly at a very reduced rate and over the course of 2-4 years.
Mostly, leasing a car is a healthy practice and has helped myriads of people secure a car without breaking the bank.
Most leasing contracts even afford you the option of buying the leased car outright at the end of the term.
However, there are certain downsides to leasing that might make it a bad idea for some customers. Below are 8 situations that could make you want to reconsider a car lease:
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1. When You Want Exclusive Ownership
The many benefits of leasing could actually make you feel you own the car. However, the fact is, you absolutely do not.
You do not own a leased car; you only have temporary usage based on your lease agreement.
To make it worse, you are responsible for the chunk of repair costs even though you do not own the car. You’ll have to handle and pay for repairs outside the scope of your warranty and the dealership will not contribute a dime.
So, if you thought lease deals give you some sort of ownership privileges, you thought wrong. If you want nothing less than full ownership of your car, leasing would be a bad idea.
2. When You Want Unrestricted Mileage
Most leases often have annual mileage restrictions stated in the agreement. This means when you lease a car, you cannot go beyond a certain number of miles each year.
According to TrueCar, the average annual mileage for most leased cars is 12,000 miles. Some could even extend to 15,000 miles.
If these numbers do not sound like something you can keep up with it, then leasing is absolutely not for you. Also, if you regularly engage in long drives, you might want to rethink leasing a car.
3. When You Love Switching Cars
There are lots of people who are naturally predisposed to switching cars every one to two years. And that’s not a bad thing.
However, if you fall into this category and you are considering leasing a car, you might have to let go of this harmless proclivity, because leasing makes it almost impossible to keep up.
So, if you are considering leasing a car, think about whether you want to be stuck with the car for 2-4 years. If not, then please, by all means, buy the car instead and/or opt for a loan if you are on a budget.
4. When You Want a Cheap Option in the Long Term
While it’s true that leasing offers you the chance to pay monthly at a reduced rate, there are some nuances to pay attention to.
First, “reduced” in this context does not mean “cheap”. This means that while you are paying just hundreds of dollars monthly, you realize just how costly the option is when you calculate long term.
In addition, if you do not have a stable job or you get into a financial mess during the lease, you’d still bear some responsibility.
In such cases, the dealership would take back the car and auction it. If they sell it for less than you owe, you’d have to pay the difference.
Also, even when you buy the car at the end of your lease term, you’d have paid way more than the actual cost of the car.
Not to mention added expenses like the huge down payment, taxes, insurance and other financial burdens. Baumeister explains the expenses thus:
“The annual car insurance cost for a leased car is usually higher than for a purchased car. Also, the driver of a leased car must pay personal property tax on the car. In some states, no personal property tax is owed on a car that you are purchasing. This tax is many times only included in the fine print of a car lease contract.”
So, leasing a car might not be the cheapest option you think it is and you might want to explore other options.
5. When You Hope to Opt Out Mid-Lease
If you are interested in leasing a car and you get fed up easily, you probably shouldn’t do it. Leasing a car will keep you chained to the agreement, even when you want out so badly.
If you do fight your way out of the lease, you’d be spending a lot in terms of not just money but physical exertion.
Point is, opting out of a lease is almost impossible and if you don’t like that arrangement, leasing is probably not the best idea for you.
6. When You Have a Not-So-Good Credit Score
We will not mince words here; leasing is an absolutely terrible idea if you don’t have a good credit score. In fact, most dealerships would not lease their cars to you if you do not meet certain credit score requirements.
So, if you are looking to lease, you should probably work on getting your credit scores up. Attempting to lease before doing that is a plain egregious idea.
7. When You Have Plans to Modify the Car
Remember when we mentioned you do not own a leased car? Well, here’s another fact that solidifies that point.
Most lease agreements forbid customers from making modifications or customizations of any kind to the car.
So, if you are the type that likes to touch up a car now and then, do not jump in a lease agreement. Dealerships and manufacturers want their car back the same way you got it; although a simple level of wear and tear is allowed.
Modifying the car in any way might mean a breach and put you at risk of financial penalties. If that’s a restriction you cannot live with it, then leasing is a bad idea.
8. When You Care Too Much About What People Think
There are people all around that have stigmatized leasing and talk down on the idea every chance they get. We found testimonies of folks with leased cars who constantly deal with subtle disrespect from this category of people.
If you don’t have the chin for that or you get easily discouraged after unkind comments, think twice about leasing.
While this seems like a minor issue, it is absolutely worth your consideration because there is a good chance you’d have to deal with such comments/treatments.
An easy solution to this, though, is just keeping the lease to yourself and your loved ones, if you eventually sign up for one.