Leasing a car may prove to be beneficial to some people while it can proved to be harmful to other people at the same time. It can prove to be the best alternate to buying but not for everyone.
Here are some potential pros and cons of leasing a Car so that you can decide on your whether it is beneficial for you or harmful to you:
Pros of leasing a car:
Following are the pros of leasing a car:
- Lower Monthly Payments: car leasing is actually the payment for the portion you use so it is not usually a deal of loss. Your monthly lease payments are almost 30 to 60 percent less than the actual price of purchase of the car. So leasing a car could be beneficial in this way.
- New Car more often: since the car leasing is based on agreement and this agreement may last almost 3 to 5 years, so you can always have a new car after the end of the lease agreement. You can get the more drive and car for every 3 to 5 years.
- No used car hassles: leasing a car always gets you the brand new car so the hassles of the used cars are eliminated. You do not have to maintain the car or do not have to worry about the car and just enjoy the ride.
Cons of leasing a car:
Possible cons of leasing a car are:
- No ownership equity: the biggest disadvantage of leasing a car is that even by paying for the car, you do not own the ownership of the car.
- Excessive mileage charges: the contract of the car leasing consists of the agreed mileage and if your car mileage exceeds the agreed limit, you have to pay extra charges over it.
- Excessive wear and tear charges: you also have to pay extra for the extra wear and tear of the car. This is another biggest con of the leasing a car.
Advantages of Car Leasing
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- Lower monthly payments
- Lower down payment
- You can drive a better car for less money each month
- Lower repair costs
- You can more easily drive a new car every two or three years
- No trade-in hassles at the end of the lease
- You pay sales tax only on the portion of the car you finance
Disadvantages of Car Leasing
- You don’t own the car at the end of the lease
- Your mileage is limited to a set amount, typically 12,000-15,000 miles a year (excess miles are paid for at the lease termination)
- Lease contracts are confusing
- Leasing is more expensive in the long run
- Wear-and-tear charges can add up (paid at lease termination)
- It’s costly to terminate a lease early if your driving needs change
These are the main advantages and disadvantages of Leasing your car .
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Veeramachineni Lalitha
I am Finance Content Writer. I write Personal Finance, banking, investment, and insurance related content for top clients including Kotak Mahindra Bank, Edelweiss, ICICI BANK and IDFC FIRST Bank. My experience details : Linkedin