On the surface, leasing a car sounds like a smart option.
You’ll have the opportunity to upgrade your vehicle every two to five years. You might have lower payments than you would with financing a car, and when you complete the term, you turn in your vehicle and walk away.
However, there’s another side to leasing you should investigate before committing to one. The dark side.
Here are a few things you’re going to want to know well before you sign on the dotted line for that leased vehicle.
1. Leasing can be more expensive than financing
Yes, you gain the flexibility to change cars regularly, but with those changes come endless cycles of payments.
Meanwhile, if you finance your car, once you pay off the balance you’re free of payments for good. That’s simple math.
2. Leasing comes with more fees
Your lease could have an acquisition and/or disposition fee, resulting in thousands of dollars you might not recoup.
Then there’s the normal wear and tear that comes with car ownership. If you turn in the vehicle in less than pristine condition, you might pay a fee for the dealership to restore it.
3. Driving restrictions
When you sign a lease, you have a mileage limitation. If you exceed this rule, you’ll pay for every mile you exceed, which can be as high as 50 cents per mile.
Even a few thousand miles over could result in hundreds of dollars in fees, so it’s important to take your driving habits into account before going with a lease.
4. Limited customization options
Want to change your car’s paint color, seating trim, or even its engine? With leasing, you won’t have the opportunity to do these things.
It’s akin to trying to paint the exterior of your apartment. Since you don’t own it, you can’t make major changes to it. Therefore, if you want to customize your ride, leasing won’t be the best option.
5. Backing out of a lease can be pricey
You can get out of your lease if you need to but you’ll pay an early termination charge/penalties. These charges, which would be due at the time of turn in, makes ending a lease early financially unreasonable for many.
Instead, if you can no longer afford your lease, the best option is to first gain approval for a lease swap from your lender then use a service like swapalease.com to find someone to take over the payments.