Have you ever stepped into the shiny showroom of an auto dealership? You walk around the vast selection of cars all perfectly parked on the waxed floor inside, or you wander among the colorful cars spread out on the outside lot, and suddenly your sales representative starts asking you questions. One of these questions might be, “Would you like to lease or buy?” How do you determine the best option at that point?
Rather than tell you what’s best for you, I would like to explain the pros and cons of leasing a vehicle and let you make the decision based on your current financial situation.
Advantages of Leasing:
- Lower monthly payments, usually.
- No required down payment.
- Fewer maintenance headaches: Typically the car will be under factory warranty for the duration of the lease.
- Lower taxes: Taxes are estimated based on the value of the lease rather than the entire value of the car.
- Early termination charges if you change your mind.
- No ownership: You have the option to either buy the car at the end of your lease or trade it in.
- Excessive mileage charges: These can get pretty high if you go over the miles outlined in your lease contract!
- Excessive wear and tear charges: Remember, you don’t own the vehicle, so you’d better not damage it! This is particularly a disadvantage to pet owners, as my furry friends and I might scuff up the interior.
The best decision will come from weighing your options and getting more information from the dealership itself. Whatever choice you make, the good news is that you can actually reach the pedals—I’m not so lucky.
Check out our Budgeting Worksheet to see how much discretionary income you have that can be used toward a brand new lease!