Q. Why leasing a car is less expensive than owning a car and should I lease a car?
A. The reason leasing a car is less expensive than owning a car is simple - you are only paying for the difference between the new car value and the car's estimated value after two or three years at the end of the lease.
However, leasing is not for everyone. Here are some of the disadvantages:
Higher insurance costs
If you use leasing to step up to a more expensive car, the insurance costs could be higher than you expect. Make sure check insurance quotes before making any decision.
No equity in the car
At the end of the lease, you have no equity in the car. Even you lease the car twice, each with 3-year term, at the end of 6 years, despite you spend less on least costs during these 6 years and have less maintenance costs, you will still end up being a winner if you buy the car outright.
Low mileage limit
A typical lease allows 12,000 miles a year. If you drive more than that, you could face expensive mileage penalties. And leasing companies levy additional penalties for wear and tear on the car too.
If you fit the mileage profile and tend to take good care of your car, leasing may appeal to you. And you will be avoiding any hassle involved in selling or trading in a used car.
If you do decide to lease, make sure your contract includes so-called gap insurance. If you should have an accident early in the lease, the insurance will cover the difference between repair or replacement of the car and the amount you already have paid on it.
A. The reason leasing a car is less expensive than owning a car is simple - you are only paying for the difference between the new car value and the car's estimated value after two or three years at the end of the lease.
However, leasing is not for everyone. Here are some of the disadvantages:
Higher insurance costs
If you use leasing to step up to a more expensive car, the insurance costs could be higher than you expect. Make sure check insurance quotes before making any decision.
No equity in the car
At the end of the lease, you have no equity in the car. Even you lease the car twice, each with 3-year term, at the end of 6 years, despite you spend less on least costs during these 6 years and have less maintenance costs, you will still end up being a winner if you buy the car outright.
Low mileage limit
A typical lease allows 12,000 miles a year. If you drive more than that, you could face expensive mileage penalties. And leasing companies levy additional penalties for wear and tear on the car too.
If you fit the mileage profile and tend to take good care of your car, leasing may appeal to you. And you will be avoiding any hassle involved in selling or trading in a used car.
If you do decide to lease, make sure your contract includes so-called gap insurance. If you should have an accident early in the lease, the insurance will cover the difference between repair or replacement of the car and the amount you already have paid on it.
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