When Buying A Car Is Better Than Leasing
While leasing a car might make sense for tourists that are traveling to a foreign country for vacation, for most people buying a car is better. Below are some reasons why you’ll want to avoid leasing vehicles unless it is absolutely necessary.
Leased Cars Limit How Much You Can Drive
When you purchase a car outright, you can drive it for as long as you choose. It won’t matter whether you put 10,000 miles on it per year or 20,000 since it’s yours. But with a leased car it does matter because the majority of leases will place caps on how many miles can be driven each year. These limits will typically range from 12,000 to 15,000 miles, and if you go above it you might incur hefty fees. The reason dealerships restrict mileage is because they want to be able to either lease the vehicle again or find a second-hand buyer, which is harder to do if it has too many miles.
Leased Vehicles Often Come With Termination Fees
Car dealers will often point out that monthly charges associated with leases are usually lower than standard car payments. While they’re right, they’re not telling you the whole story. For instance, there are often additional fees you’ll occur with a lease, one of which is the earlier termination fee. If for some reason you need to end your lease earlier than expected, they will charge a termination fee that can be quite high. When you purchase a car directly this fee can be completely avoided.
You’ll Be Charged Penalties for Wear And Tear
When you lease a car, you’ve got to be especially careful with it, especially if it’s a higher-end model, because you will be liable for any damage that occurs. Most dealerships will charge you penalties for things such as beverage spills, dents, scratches, and broken or cracked windows, and because they can be subjective about it, you might be hit with fees for things that you don’t think are fair. This is just another reason why it is better to own the vehicle outright so that you’re not beholden to the whims or views of someone else.
The Upfront Fees for Leased Vehicles Are Always Higher
When you buy a car directly, you’ll incur fees such as registration costs, taxes, and perhaps the down payment. For leased vehicles, you’ll have to cover the initial monthly payment, a security deposit, registration, and taxes along with the lease initiation charge. As you can see, the costs for leasing a car upfront are substantially higher than just buying it.
Leased Cars Usually Have Higher Interest Rates
In addition to the charges previously mentioned, such as registration, taxes, and lease initiation, those who lease a vehicle will also be charged interest on top of their standard monthly payments. And, as you probably guessed, the interest rates tend to be greater than that incurred when directly purchasing a car. The reason for this is that those leasing the vehicles are not the actual owners and thus lack assets that can be used as collateral.