Leasing a car may seem like a good idea on the surface. The monthly payment on a lease is often lower than if you were to finance a vehicle purchase with a loan, which means most people can get behind the wheel of a newer, more expensive car than if they were trying to buy. Car leasing also allows you to get a “new” car every couple of years, and you don’t ever have to worry about the hassle and time-consuming process of buying or selling a vehicle. However, most financing experts caution against leasing a car, and for good reason. Here are five major downsides to consider before signing that dotted line.
1. You have to work within the mileage constraints.
Almost all leases have a certain number of miles that are part of the car lease contract. It may be a specific number per year or just for the term of the lease, such as a 50,000-mile cap for a 5-year lease. Ten thousand allowed miles per year is a common number, but the problem with this is that most people are driving more than that now. According to the U.S. Department of Transportation Federal Highway Administration, the average American drives 13,476 miles per year. However, this varies greatly depending on age and gender. For example, women aged 20-34 drive an average of 12,004 miles, and men aged 35-54 drive almost 19,000 miles on average. If you go over your allowed miles in a lease, you’ll have to pay a fee for every extra mile. If you are driving an extra 9,000 miles a year, this can add up to a lot of money.
2. You can’t change cars whenever you want to.
While car leasing can put newer cars into the range you can afford, you usually have to keep that car for the duration of the lease, which can be three to five years. That means not even halfway through your lease term, that new car isn’t so new any more. Unless you want to pay serious fees to get out of your lease early, you are out of luck. If you are someone who tends to get bored with a vehicle quickly, this could be especially problematic and mean that you end up paying for a car you don’t even like driving anymore.
3. It’s difficult to get out of a lease.
Leases are contracts, and they’re created to benefit the dealer. The dealer knows that there may be some situations where you don’t want to keep the car for the full lease term, and they’ve anticipated this and put every stipulation into the contract already. If something happens, such as a change in job that means you need lower monthly payments or you decide you are ready to move to buying, and you want out of the lease, it’s nearly impossible to do so. It’s going to take a lot of time and effort, and even if you can manage to get out from under a lease, you’re going to have to pay a*lot *in fees to the business to do it.
4. Leases can be confusing and hard to understand.
Unless you are a lawyer, the legal terms and fine print in a car lease can be a lot to really read and fully understand. Most people just look at what their monthly payments are going to be, skim through the rest and sign the contract without giving it too much thought. All that fine print is important, however, and you won’t realize *how *important until you try to get out of your lease or something happens and you find out you’re on the hook for hundreds of dollars in unexpected costs.
5. You’re locked into maintenance costs.
Leases usually require you to follow a very rigid maintenance schedule, and you are responsible for the costs just like if you owned the car, and that’s on top of the usual payments. This means a handful of oil changes a year, windshield wipers, air filters, coolant flushes, and wear and tear parts like brakes and tires are all things you could be dealing with. If you don’t keep up with the dealer’s requirements, you can be in violation of the lease terms, which can cost you even more.
Leasing a car may seem like a good idea on the surface, but as you can see, there are many reasons to think twice. It’s also not the only option if you don’t want to buy a car. A car subscription is very similar alternative to leasing a car - but subscriptions offer a lot more flexibility. With subscription services like Canvas, you just pay a monthly fee, just like you would a lease payment, but you get a lot more than a lease can offer for the same costs.
You can usually swap out for a new car any time you want, which is a big plus for those who like variety, and the payment usually covers insurance and maintenance costs as well. This means all you have to provide above your monthly subscription payment is gas money and a deductible — usually under $1,000 — if there is an accident.
If you know you don’t want to purchase a car but you’re also not 100% sold on a lease, a car subscription service could be just what you’re looking for.