Disadvantages Of Leasing A Vehicle

As prices of new cars have skyrocketed, leasing has become an option for those in the market for a new or even late-model used vehicle. Unlike financing a car for the entire selling price typically over a period of five years, a lease allows the shopper to pay only for the time the car will be used. In other words, a lease can be thought of as a rental term. Automotive leases are calculated by dividing the future value of the car by however many months the term is offered. This enables the shopper to have a far lower monthly payment over the individual who decides to finance the old-fashioned way. This sounds great on paper, because you can drive a brand new car and enjoy a considerably lower monthy payment at the same time. But there is a catch. In fact, there are several disadvantages to leasing a car. Most leases require a lump sum or trade equivalent at their inception, just as if you were making a down payment on a traditionally-financed car. When you buy a car outright, it is yours once the combined sum of the down payment and monthly obligations is met. However, when leasing a car, you have nothing to show for it once the term has ended. Moreover, ads that quote low monthly payments on leases fail to mention that the sales tax and other fees such as titling and licensing will be added to that payment. On average, you can expect that lease payment to be $50-75 higher than what those tempting ads read. You generally have one of two choices at the lease term’ s end: If it is a closed-end lease, you can purchase the vehicle for the amount predetermined at the onset. Most leases are arranged in this manner. The other type; known as an open-ended lease, allows the dealership to set the car’s value at the end of the lease term. In either case, car leases are usually set for 36 months.The other choice, of course, is to simply walk away. Here is the mistake many people make when choosing the leasing option: Their intent is to buy it eventually, and so in the consumer’s mind, he or she will effectively enjoy that lower payment for the first three years.But now a problem arises, for in the event they decide to purchase what is now a three-year-old car, they will in all likelihood have to finance it as a traditional buyer would have in the first place. And of course those payments will increase unless that term is stretched out over another 48 months. Thus, this brings up a question: If the intent was to buy the Category:Home › Autos • Will the trend toward economy-size car models lead Americans back to buying smaller-sized cars? — part 2 • You should never use after-market auto parts when maintaining or fixing your car • Should a new car be rust-proofed? • Will the trend toward economy-size car models lead Americans back to buying smaller-sized cars? — part 1 • Five safest cars in North America • How to ensure your teen drives safely after getting a license • Pros and cons of using an hydrogen generator for your car • DIY automotive maintenance: How to change the oil