If there is a particular car you like, but you are not in a position to buy it outright, then car leasing is the perfect option for you. It gives you the opportunity of driving a new model car for a specified period for an initial deposit and a monthly payment in return. Just like any financial commitment, it is essential that before you sign a contract, you consider carefully your ability to continue meeting the monthly payments. Before you make the final decision, you should consider the following pros and cons of leasing a car.
Saves you money
Auto leasing costs less. When you lease a car, there is a lease agreement that you sign stating the lease duration and the regular monthly payment. The monthly payment is the predetermined value of the depreciation of the vehicle during the use of it. Interest is also included in the amount. When you compare the monthly lease payment to a monthly auto loan payment, the cost of leasing is lower.
Benefits of tax
You will not have to worry about paying upfront any sales tax on the amount of lease when you lease a car. The sales tax is included in the amount you pay each month.
Maintenance is low
You do not have to spend any cash on repairs that are expensive if a car that you lease still has the current warranty.
Auto leasing provides you with variety. With a short duration of a lease agreement, which takes two or three years, you can take back the car and lease another one. This way you have a variety of older model or brand new cars to drive.
Usage is restricted
Conditions are given to most of the auto leasing agreements. The number of miles you can drive the vehicle in a year can be limited so if you drive more than the miles you are allowed you may be required to pay an additional fee. With the limited number of miles in a year, where you go for trips and vacations can be limited.
Higher eligibility requirements
If you have bad credit, it can be hard for you to lease a car. Before the auto leasing company leases a vehicle to anyone, the company checks the credit history to make sure that there will be no lapses in the monthly payments.
Expensive for early termination
It can be a challenge to get out of a lease agreement early. If the car you leased is stolen, totaled, or you want to terminate the lease you will be required to pay the rest of the lease amount. If stolen or totaled, the amount you owe may be too high that it may be impossible for your insurance to cover it.