Before you decide on a lease, you should be aware of some possible downsides. These may depend on your circ*mstances and how you view car ownership but here’s a compilation of 10 reasonsnotto lease a car:
1. You don’t own the car with a lease
For some drivers, leasing a car is like renting a house: why rent and “waste money” when you can buy and end up with something you own?
If you want your name on the title of your car, leasing may not be for you. With most leases, you hand the car back at the end. (Caveat: some deals allow you to purchase the car at the end of the lease agreement).
2. You’re still tied into a two- or three-year deal
Most lease deals are two or three years. This means that you’re tied into making substantial payments for this period and also into driving the same car. More flexible options are available, including shorter-term car subscriptions.
3. High contract break fees for leases
Expect to pay through the nose if you want to terminate your lease deal early. You may have an obligation to pay up the remainder of your lease if you want to end it. And negotiating the huge break fees down with leasing companies that see their revenue dwindling can be difficult.
4. Strict mileage limits for leased cars
Most lease deals include a mileage limit of 10,000 to 12,000 miles per year. That’s around 800 miles to 1,000 miles per month or just under 200–230 miles per week.
If you regularly do more miles than this, you’ll need to negotiate a high mileage lease. Otherwise, a lease may be a bad idea because you’ll be paying excess mileage fees every month.
5. You pay more interest on a lease than on a loan
It surprises some drivers that you pay more interest on a lease than on a purchase loan. Because you have no collateral with a lease (you don’t actually own the vehicle as an asset), lenders usually reduce their risk by increasing the interest rates.
Interest accounts for a high proportion of a monthly lease payment. When drivers know this, leasing may seem like a bad idea for many.
6. You can’t sell a leased car to finance a new one
Often, car owners progress through several purchases, upgrading each time until they finally own the car they want.
With leasing, you may be able to drive the car you want earlier but you’ll never be able to use the vehicle to finance the next one. You simply return it at the end of the lease and may become trapped in an endless “leasing cycle”.
7. You can’t customize a leased car
If you like to customize your car, it’s a good reason not to lease a car. Under the terms of your lease agreement, there are usually strict conditions on what you can and can’t do with your car. Most vehicles must be returned in their original condition minus the expected wear and tear.
The leasing company determines what condition is acceptable. Drivers may be charged additional expenses if standards are not met.
8. You’re still responsible for maintenance and repair costs
Even though you don’t own the car you lease, you’re still likely responsible for maintenance and repairs. As most car owners know, these costs can mount up very quickly. Some drivers object to the fact that they must pay for the upkeep of a car that they never own. And the leasing company will expect you to prove that you’ve maintained the car during the lease term.
9. You still need to pay for registration and roadside assistance
With leases, you’ll still need to arrange registration and roadside assistance yourself — but without actually owning the car you drive. Registration fees might be higher for a leased car than a car you own, depending on the state you live in.
10. If your car is totaled, your lease terms remain the same
You’ll need the right insurance coverage (gap coverage) with a lease because if you’re in a serious accident and your car is totaled, your car lease payments don’t change.
Without the right insurance, you may need to pay off the remainder of your lease with nothing to show for it. Also, bear in mind that insurance is often higher for a leased car than one you own.
