The arrival of March is historically the time many people are struck with New Car Fever. Just as surely as the leaves start to sprout from the trees, the urge to prowl the auto dealer lots in the area for the perfect new ride consumes them. They delight in shiny chrome wheels, electronic dashes, third row seats, and that wonderful, intoxicating new car smell. Some not only look forward to the excitement of the hunt, but also to the challenge of negotiating a great deal — getting the best bang for their buck.
Leasing versus buying is one of the dilemmas that face the fever-struck consumer. Leasing has several appealing aspects as well as many pitfalls to be aware of. We’ve assembled a list of leasing pros and cons to consider.
•Lease payments are typically lower than monthly payments for a loan. The required down payment, if any is lower than a loan as well. In essence, you can drive the same car for less money when you choose to lease. Or to look at it another way, for the same monthly payment, you can drive a more expensive vehicle compared to financing a loan.
•Leasing allows consumers to drive a new vehicle every few years. Typically leases are for a three-year contract, meaning you can get a new car every 36 months. With the new car, you also get the latest technology, entertainment and safety features.
•Most leased vehicles are covered under the manufacturer’s warranty during the entire length of the lease, eliminating the worry of large maintenance and repair bills.
•When the lease is up you don’t have to worry about the hassles of trying to sell the car. You just turn it in and begin a new lease if you so choose.
•Almost every lease program has a yearly mileage limit that, if exceeded, may incur a stiff penalty at the end of the lease. If you put a lot of miles on the car, these limitations probably won’t work for you.
•At the end of the lease term, you don’t own the vehicle. Some people are OK with this. Others feel it doesn’t make sense to make a monthly payment for three, four or five years on a car they’ll never own.
•Excessive wear, tear, dents and dings can result in financial penalties.
•Modifications and customizations are not normally allowed on leased vehicles. If you decide to lease the car that already comes with those fancy wheels and premium sound system, you’ll be paying for the equipment that you only use for three or four years and the next person who owns the vehicle will reap the benefits.
•Leasing is like a rental agreement. You usually sign a long-term contract and agree to penalties if the contract isn’t fulfilled. Early termination penalties for example, can result in thousands of dollars. If you buy the car instead of leasing, you could simply sell it if you encounter financial problems. With a lease, you’re always on the hook if you can’t make those payments.
So should you lease or buy?
Leasing does have its appeals, but is less flexible and ultimately more expensive than buying a new car and keeping it for a while. Whether leasing is a good deal or not depends on the type of person you are, what you value, how many miles you drive, and how well you maintain and treat the vehicle.
As always, there’s no simple answer, but hopefully, considering these pros and cons will help you determine if leasing best fits your needs and goals.
Cheryl Parson is president of the Better Business bureau serving West Central Ohio. The BBB may be found on the Internet at www.lima.bbb.org.