Hello and thanks for the question.
There are a number of advantages and disadvantages to leasing a car.
One website that has a very thorough and impartial discussion of this
question can be found at www.smartmoney.com:
from http://www.smartmoney.com/autos/leasing/index.cfm?story=buylease#advantages
They list the following advantages and disadvantages:
The Advantages
Low Down Payments -- Even though a lot of the advertised lease deals
assume a down payment, you can often get the dealer to limit it just
by asking. Of course, the more cash you come up with initially, the
lower your monthly payments.
Low Monthly Payments -- Since you are only paying off the depreciation
on the car -- not its full value -- your monthly payments are much
lower than if you opt to finance the purchase of the entire car over
the same period of time.
Easy Turnover -- Assuming your car is in good shape, when your two or
four years are up, just stroll into the dealer, hand over the keys,
and drive out with a brand new car and a new lease arrangement. You
don't have to bother with selling the car or haggling with a dealer
over trade-in value. That was all taken care of beforehand.
The Disadvantages
No Equity -- Similar to paying rent on an apartment, your lease
payments don't go towards owning anything. Unlike traditional
financing, you can't look forward to the day when the payments will
stop and you can drive your own car free and clear.
Lack of Flexibility -- You pay a big penalty if you want out of the
lease before the full term. Bailing out early may cost you as much as
six extra months of payments, depending on your leasing company.
You May Pay Extra -- Most leases charge an extra 12 or 15 cents for
each mile you drive over a certain limit. Typically the lease
agreement grants 12,000 to 15,000 miles per year. (Drivers average
15,000 miles per year.) Also, you'll have to pay up for any damage to
the car beyond normal wear and tear when you turn it in. One way to
avoid the mileage charge is to buy more miles at a reduced rate (of
around 10 cents) up front.
Insurance May Come Up Short -- If you total the car or it gets stolen,
your insurance will only reimburse you for the car's market value,
which might not cover what you still owe on your lease. You can buy
extra "gap coverage" to protect against this, and some lease deals
include it automatically.
The website also contains some questions that you should consider when
deciding between leasing and buying. These include:
How often do you want a new car?
How much do you drive?
Do you use your car for business purposes?
Do you worry about your car's resale value?
For a discussion of the relevancy of these questions to the
leasing/buying issue visit
http://www.smartmoney.com/autos/leasing/index.cfm?story=buylease#advantages
A website at www.edmunds.com also contains an illuminating discussion
of this issue. They touch on a number of the same points as the Smart
Money website. There list of pros and cons to leasing is:
Advantages of Leasing
-Lower monthly payments
-Lower down payment
-You can drive a better car for less money each month
-Lower repair costs (with a three-year lease, the factory warranty
covers most repairs)
-You can 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 Leasing
-You don't own the car at the end of the lease
-Your mileage is limited to a set amount, typically 10,000 to15,000 a
year
-Lease contracts are confusing, so it makes it difficult to ensure
you're getting a fair deal
-Leasing is more expensive in the long run
-Wear-and-tear charges can add up
-It's hard to terminate a lease early if your driving needs change
This list is from:
Edmunds.com advice
http://www.edmunds.com/advice/leasing/articles/43093/article.html
Other useful websites on this topic:
"Leasing How-to" from Carbuyingtip.com
http://www.carbuyingtip.com/leasing_advice.html
FAQ on Car Leasing from LeaseGuide.com
http://www.leaseguide.com/faqs.htm
USLaw.com Leasing a Car: Advantages and pitfalls of leasing
http://www.uslaw.com/library/article/mzcarleasing.html?area_id=45
Search Strategy
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Hope that helps! If you would like further clarification please do not
hesitate to ask.
Good luck with your search.
-blinkwilliams-ga |
