<img src="https://events.xg4ken.com/pixel/v2?tid=KT-N2BAB-3ED&amp;noscript=1" width="1" height="1" style="display:none">

    The Pros and Cons of Auto Leases

    Lisett Comai-Legrand

    Lisett Comai-Legrand About The Author

    Aug 2, 2018 7:31:00 AM

    When you lease a car, you only pay for a portion of the car’s actual cost while acquiring a new or used car. So, if you are leasing a car, then you only pay for that portion of the car that you have used over the years of your lease agreement. Many people choose to lease a new car, as it allows them to get a higher value car, while not being required to pay the whole price of the car.

    The Pros and Cons of  Leasing a Vehicle

    Though leasing has been growing in popularity, it has its own set of considerations. The advantages and disadvantages of leasing should be fully understood before signing on the dotted line. Here are a few of the pluses and minuses of auto leases that should help you in understanding the car lease process better.

    Pros of Leasing a Vehicle:

     
    Lower Monthly Payments

    Car leases may have lower monthly payments. In addition to lower monthly costs, car dealers sometimes offer lease specials to aid them in moving the new vehicles off their lots.

    A Brand New Car More Often

    If you buy a car and end up not liking it after a few years, you are stuck with it. If you lease a car, you can easily trade that car for something else once the lease terms are up.

    You Pay Only for a Part of the Vehicle Cost

    While leasing a car, you only pay the difference between the car’s current price and its expected value at the end of the lease agreement terms. This difference is referred to as residual value. According to the resale history of your car, the dealer then determines the value of the car at the end of the lease.

    For example, you are purchasing a car that has a current price of $40,000. The expected value by the end of the lease is $17,500; your payments then will be based on the remaining $22,500.

    Future Price of the Car is Set

    The resale value of your car is predicted and put in writing as a part of the lease agreement. If the decline in value of the car is much faster than predicted, it will have no effect on the lease agreement. This can be beneficial for you if you decide to purchase the car after the end of the lease.

    the pros and cons of auto leases | advantages and disadvantages of leasing a vehilce | what does it mean to lease a car | first alliance credit union mn

    Cons of  Leasing a Vehicle:

     
    At the End of the Lease, You Do Not Own the Car

    Once your lease is up, you will not own the car. You’ll either have to finance it outright or trade it in for a new lease.

    Mileage is Limited

    Some of the leases are limited to 10,000 to 12,000 miles annually, and if you do go over the limit, you will have to pay for each extra mile at the end of the lease agreement.

    Wear and Tear is Your Responsibility

    Once the lease ends, the car should be returned in good and non-altered condition; you will be responsible for any damages.

    Leasing Can Be More Expensive

    If you fall into the loop of leasing one car after another, then you may end up paying more money in the long run than if you had just purchsed a car.

    Early Termination is Costly

    If you do not like the car you leased, or for some reason are unable to continue the lease agreement, and you decide to break the contract, you may be required to pay a fee.

    Summary:

    If you are planning on leasing a car, it is better if you know the differences between purchasing and leasing. So before you lease a car, brush up on the pros and cons of leasing and do your research on lease agreements for vehicles. 

    We do our best to provide helpful information but we cannot guarantee the accuracy or completeness of the information presented in the article, under no circumstance does the information provided constitute legal advice. You are responsible for independently verifying the information if you intend to use it in any way. Additionally, the content is not intended to be reflective of First Alliance Credit Union’s products or services, for accurate and complete details about our product and service information you must speak to an advisor at First Alliance Credit Union.