Car Leasing – Pros and Cons

pros and cons of car leasingCar leasing has unique benefits and downsides, advantages and disadvantages, pros and cons — when compared to buying a car with a loan or with cash.

The primary attractions of leasing are lower monthly payments and always having a new car with full manufacturer’s warranty every few years. However for people who drive more than an average amount of miles and prefer long-term ownership, without continuous payments,  leasing may not provide benefits.

Let’s look at the details now.

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PROs of Car Leasing

  • Monthly payments are 30%-60% less than loan payments for the same car, same term
  • Car is always under warranty, assuming lease term doesn’t exceed warranty period
  • Down payment is optional and often not required
  • Built in GAP protection, usually free with lease
  • Avoids used car hassles at end of lease
  • Have option to purchase car at end of lease or return it
  • Reduces sales tax burden (in most states)

CONs of Car Leasing

  • Fixed mileage allowance, suitable for low or average mileage drivers. Per mile fee if exceeded
  • Acquisition fee up front, unique to leasing
  • Disposition fee at end of lease if car returned, unique to leasing
  • Low lease payments usually do not build ownership value in the leased vehicle
  • Normal wear and tear allowed, but excessive wear and unrepaired damage results in lease-end charge
  • Modifications to leased vehicle not allowed
  • First month’s payment required up front, not month later as with loan