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The Pros and Cons of Leasing a Car!

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  • The Pros and Cons of Leasing a Car!

    "In the market for a new car? Are you going to buy or lease?"

    That question is common today. Leasing, which was once unknown and not available to individual consumers, has increased to about 20% of new car buyers.

    But why lease when you could OWN? Let's start with some of the CONS:
    1. You never own a car. Some people just like knowing the car is theirs and prefer to know they can treat it as they would like. When you lease you have to consider the condition of the car at the end of the agreement.
    2. You'll always have a monthly payment. Many people would prefer to pay a lot upfront, make higher monthly payments in financing but then have a period where there are no monthly payments when the car is owned outright.
    3. You'll never develop any equity into the vehicle. In the long run, it's true that it's more cost effective to buy and hold a car for a long time and then you still have money in the car as an asset when it's time to sell and buy again.
    4. You are always limited as to the number of miles you can drive during the lease. Generally, the limits are often 12,000 miles per year although 10,000 and 15,000 limits are also common. If you go over these limits at the end of the lease you will get hit with a costly fee sometimes as much as $0.15-.020 per mile.
    5. If you decide you don't like the car you are stuck in the lease until the end of the term, often 36 months or longer. The lease agreement is binding and can be costly to end early.
    6. If you move overseas you'll still have a car in a lease agreement. Although, there are some online companies that match you with someone to takeover your lease, you still might get stuck holding onto your car or face fees up to thousands of dollars.
    7. You'll need very good credit to lease. It's often the case that your credit rating needs to be even higher than you would need to finance the car when buying.



    Just reading the above list makes it seem like nobody would want to lease so what is the draw? There are a very convincing list of PROS that could make leasing an attractive way to get into your next car.
    1. You can drive a new car for significant less money upfront. Sometimes, depending on the lease deals you can do it with no money upfront at all. Commonly there will be money "due at signing" that covers the first month's lease and fees but these are significantly less than if you are buying and you want to keep your payments low.
    2. Payments will be lower than financing through a bank. Not because the interest rates are low, but because in leasing you are only paying for the depreciation of the time you lease the car. You aren't paying for the whole car.
    3. You always drive a car under warranty. Although you might see some leases that take you just outside the warranty of the vehicle, you'll commonly be covered bumper to bumper by the manufacturer during the period of the lease agreement.
    4. Repairs will be non-existent or low. Many people don't want to imagine being stranded or having to deal with big repairs. Generally, most major repairs begin to show up in the 4th year of a cars life on the road.
    5. You get a new car every 3 years or so. Who wouldn't love smelling that new carpet and getting to pick something brand new ever few years!
    6. You could maximize the miles with a spouse or other family member. Maybe the spouse that drives 3 miles per day leases the car but in the third year you realize that you'll have 10,000 extra miles to burn if you want. The other spouse that may drive more and trade cars once in a while saving wear and tear on the owned vehicle. Why not, since you are already paying for the depreciation and miles!
    7. It might not cost as much as you think when you lease. If you negotiate an excellent lease deal, and compare it to a buy and hold car that ends up having a few thousands of dollars or repairs and tires and brakes that a newer car may not need then you might not be spending that much more to own a car.



    It's true there are many Pros and Cons of leasing a car! It's certainly a personal preference and it's a good idea to think through carefully what you are able to do financially, but leasing and excellent and viable option for many!


    Article Source: http://EzineArticles.com/6912270
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