Why You Shouldn’t Lease Your Next Car

Car leasing is a very popular way to drive a car but it can be a really bad idea for many people. Unfortunately, it’s impossible to easily remedy the situation once a mistake is realized.

If you have considered leasing your next car, the following are reasons it would be a bad decision for you:

Your only reason for leasing is for the low payments

Low monthly payments often blinds car buyers who don’t understand the potential problems. Car sales people can lead financially-challenged customers to make this mistake in their zeal to make a sale.

You drive more than 12,000 miles a year

Most car leases allow only 10,000 or 12,000 miles a year (30,000 – 36,000 total miles in 3 years), which can be much less than many people normally drive. Paying for excessive miles at the end of the lease can be very expensive.

You prefer American brands of cars to Japanese or Korean brands

Asian brand cars tend to suffer lower value depreciation than American brands due to better overall reliability and higher resale values. Lower depreciation translates to higher lease residual values, which translates to lower lease payments. In short, most American cars are more expensive to lease than most Japanese and Korean cars, even if they are the same price.

You want to customize your car

Since you don’t own your leased vehicle, you are not allowed to make modifications that can’t be reversed prior to returning it at lease-end. This is true even if the modifications essentially make the vehicle more valuable or increase its resale value. Likewise, equipment cannot be removed that can’t be replaced and make like new.

You don’t maintain your cars well or abuse them

Most lease contracts require that you maintain your car according to manufacturer specifications. Any accident damage must be professionally repaired with OEM parts. Any unusually worn or non-working parts must be replaced.

You can’t afford full coverage insurance

Car leases, like most new-car loans, require full-coverage insurance, which is much more expensive than state-required minimum liability insurance. Full-coverage means having collision, comprehensive, as well as specific liability coverage.

You don’t have a stable lifestyle or job

If you are young, unmarried, not yet settled down, have medical problems, or not financially stable, leasing might not be a good idea — because you might have to end your lease before its normal end date. Ending a car lease early can be very expensive. It’s much more than paying a small penalty fee and walking away.

You have an emotional issue with not actually owning your car

When you lease a car, the car actually belongs to your lease finance company (not your dealer). Some people don’t like the idea that they have no ownership in the vehicle they drive, or that their monthly payments don’t lead to eventual ownership, as with a loan.

If you’ll get tired of your car before 3 years is up

Some people like changing cars frequently, for various reasons. With leasing, you are committed to 3 years (sometimes a little less or a little more) and cannot “break” your lease without substantial expense. It’s better to simply not lease if you think you are that kind of buyer.

If you find that any one of the above issues applies to you, then leasing is a bad idea.