The Advantages and Disadvantages of Auto Leasing

Do you really want to own a car but you don’t want to get an auto loan? Then maybe you should consider auto leasing. To explain it simply, its just like renting an apartment, you rent the car for a specific period of time and once done, you will have the option to upgrade it. But just like any other leasing methods, there are advantages and disadvantages that needs to be considered before you take the ultimate conclusion.

The Advantages of Auto Leasing

1. It costs less.

Auto leasing saves you more money. In leasing a car, you sign a contract that states the period of time you will lease the car, and the amount of money you will be paying monthly. The amount you’ll pay will be based on the estimated value of deprication of the car during your use of the said period. Along with that, payment will also include the interest. However, if you compare the amount of payment to an auto loan, you’ll pay much less with an auto lease.

2. Tax Benefits.

When leasing a car, you no longer have to pay the sales tax together with the payment for the lease. Sales tax will now be included with the monthly bill.

3. Worry not about maintenance.

In leasing a car, especially if it is still under warranty, you no longer have to bother your self for repairs.

4. A lot to choose from.

Another advantage of leasing a car is you can drive the car you want, old or new. Once the leasing period is up, you can have the option to choose to drive newer models.

The Disadvantages of Auto Leasing

1. Restrictions.

One disadvantage of a car lease is that the contract includes a lot of conditions. One such condition is that you are only allowed limited number of miles to drive the car in a year. Any mileage accumulated past the said restriction will be payed additionally. So if you wanted to take the car on a road trip, plan it wisely to save mileage.

2. Credit scores should be higher.

Unlike auto loans, car leasing companies expect you to have good credit history. Because they are cheaper and easy to access than car loans, they do not want lapses in monthly payment.

3. Getting out of contract costs too much.

If you ever decide to terminate the contract of your car lease, you may have to pay all of the remaining months of the leasing period. Additionally, if the car is involved in an accident or was stolen, the amount you owe will most likely be too much that your insurance cannot cover it.