Is Leasing Right for You?
What Is Leasing?
Leasing is a method of financing the use of a vehicle or equipment—much like leasing an apartment or house—over a specified period of time. Therefore, it can be an affordable way to obtain the vehicle you want. When you lease, you are responsible for paying for tags, taxes, fees and insurance, just as if you owned the vehicle. (However, in most states, a lease requires less sales tax than a purchase.) You also are responsible for making regular monthly payments and maintaining your vehicle.
Why Should I Consider Leasing?
Leasing is an attractive form of financing when you:
- Want to pay only for the portion of time you use the vehicle.
- Do not want to commit to a long-term loan.
- Like the idea of replacing your vehicle every few years.
- Want to drive a larger, better-equipped vehicle that has lower monthly payments than a purchase option.
- âDo not expect to put an excessive amount of wear and tear on your vehicle.
How Does Leasing Compare to Buying?
Here are several pros and cons to consider:
Advantages of Leasing
- You will pay less per month than if you purchased the same vehicle.
- You have the option of making no down payment.
- You can transition to a new or more updated vehicle more often.
- You can drive a newer vehicle that is always under warranty, so repairs are always covered.
- You do not have to pay for or finance the entire cost of a vehicle.
- You do not have to worry about selling or trading your vehicle; when your lease is done, simply return the vehicle and walk away.
Disadvantages of Leasing
- You will not build ownership equity.
- If you exceed your mileage limits, you will incur extra charges.
- If you terminate your lease early, you may be subject to additional costs.
Advantages of Buying
- You can drive as much as you like, without possibly being charged for excessive mileage.
- You can modify or customize your vehicle as you please.
- When you pay off the loan, you will own your vehicle and can drive it for as long as it runs reliably.
- You can enjoy the freedom of having no monthly payments after your vehicle loan is paid.
Disadvantages of Buying
- You might need to commit to a long-term loan and a long-term relationship with your vehicle.
- Your monthly payments are higher than comparable lease payments.
- You are responsible for all maintenance repairs after your vehicle’s warranty expires.
- You have to go through the hassle of trading in or selling your vehicle when you decide to replace it.