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Takes these things into considering when trying to decide whether to lease a car or not. |
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Takes these things into considering when trying to decide whether to lease a car or not. |
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To Lease Or Not For some car leases seem like a great deal with their low up-front costs, lower monthly payments and no resale or trade-in hassles, but they also contain complex legal agreements, hidden costs and in some cases high-pressure sales tactics. Should you lease your next car. My money says no. Leasing a car is very similar to renting. If you decide to lease, you agree to pay a certain amount of money to drive a car for a specified length of time and/or distance. At the end of the lease you will either return the car to the leasing agency or purchase the car. Easy you say. Yes, but it can become complicated. Low monthly payments is the number one reason leasing is so popular. In almost every case, the lease payment is lower than the finance payment from a loan. Leasing also allows you to drive a "nicer" car for the same monthly payment. So whats the downfall. Almost every lease has unkown or hidden costs that you, the lessee, are legally required to pay. For example, the lessor might include a "bank fee" and/or "disposition fee" ranging from $500 to $1000 for simply writing the contract or returning the car at the end of the lease. If you decide to cancel the lease early then expect to pay a termination fee. For all practible purposes,lease contracts should be viewed as noncancelable. The lease may require you to pay extra insurance coverage on the car or impose an excess mileage charge for all miles above the set annual limit (usually 15,000 miles per year). Finally there's the "excessive wear and tear" costs that are determined by the lessor and rarely defined in the contract with any sense of clarity. At the end of your lease, when you return the car to the leasing agency, a $100 to $1000 penalty (or more and determined at their sole discretion) may be imposed even if you think you've returned it in good condition. Bottom line is leasing is the most expensive way to drive because in the end the lessee walks away with nothing to show for his/her investment. Buying the car, even with higher monthly payments, is a cheaper option with fewer unforeseen expenses. But paying cash if possible is by far the most cost effective way to save money.
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