While it is important to highlight the benefits of leasing and buying, it is equally as important to discuss the potential drawbacks. One option may be more expensive than the other. Using a lease vs. buy car calculator, for example, may point out the financial disadvantages of each.
Aside from cost, you should consider what you are getting. Leasing a car means you do not own it, even though you are making monthly payments. On the other hand, buying a car means that all the maintenance fees and repairs are your expenses to bear, not the dealer. Continue reading to learn more about the drawbacks of leasing and buying.
Leasing and buying a car each carry their fair share of drawbacks. It is important to understand your financial situation, driving habits and personal preferences before making your decision.
When you lease a vehicle, you are signing a contract that locks you in for a determined period of time. While you may be able to trade or upgrade your lease, you can’t easily “back out” of the deal. It could cost you a pretty penny to terminate your lease early.
Similarly, leasing a car requires you to stay within a certain mileage range. For example, a 3-year 36,000-mile lease requires you to turn the vehicle in after three years and stay within this mileage limit. If you run over your miles, you will likely be assessed a mileage fee for each one over the limit.
And, if you turn in your leased car with scratches, dents, paint chips or other issues, you could be charged an excess wear-and-tear fee. This could cost you hundreds of dollars when your lease is over.
Buying a car has financial disadvantages, too. For example, your down payment may be higher than it would be if you were to lease a car.
When you purchase a car, all of the expenses for maintaining it are your responsibility. Oil changes, tires rotations and replacements, brake pads – all of these costs are yours to bear.
You can also expect a higher monthly payment when you buy a car, since the loan factors in financial-related annual percentage rates (APRs). Since cars lose their value quickly, it is common for you to owe more than it is worth.
To help you decide between leasing and buying, you can use a lease vs. buy car calculator to summarize your potential expenses.