Why Lease a Car?  Why Not Lease?

Many automotive consumers understand that car leasing offers low monthly payments but question whether it has drawbacks that might make it a bad choice for them. The answer is, yes, leasing has potential disadvantages and there are reasons that some people should not do it. Let's take a look.

Do Not Lease, If ...
Do not lease your next car if your lifestyle is not settled and stable. If your job is in jeopardy, or you are about to get married, or you have an illness or poor health, or you might get divorced soon, or your finances are shaky – you should not lease a car. Any of these factors my cause you to not complete your lease as you originally agreed to do. Leases are designed to be completed as scheduled and can be very troublesome and costly to terminate early. Some of the most common complaints about leasing come from people who want to get out early and find it so difficult. If you think there is a chance you might have to end your lease early, then don't lease. It is much easier to get out of loan than a lease.

Do not lease your next car if you drive a large number of miles. Leasing saves money for people who drive about 15,000 miles a year or less — because depreciation, for which leasing pays, is only about half the total value of the vehicle. More miles means greater depreciation and a larger chunk of a vehicle's value, which makes leasing less beneficial. Even if you buy the extra miles you'll need, leasing makes less sense as the miles get greater.

Do not lease a car if you can't reasonably predict the number of miles you will drive in the near future. If your lifestyle or job does not allow you to closely estimate your annual mileage, or if your mileage varies greatly, then leasing may not be right for you. Lease payments are based on the expected resale value of a vehicle at the end of a lease. And resale value is directly related to the miles on the vehicle. If you exceed the mileage that your agreement is based on, the vehicle will have a lower resale value, and you pay the difference on a per-mile basis. This extra unplanned payment at lease-end is objectionable to many people who lease.

Do not lease a car if you like to drive your cars for years. Typical leases are relatively short — 24 months to 36 months — shorter than the time most cars are driven. Leasing one car and then another means you'll always be making monthly payments, though the payments are smaller than loan payments for the same car. Many people prefer to make higher payments and then enjoy a time during which they are free of payments. If this sounds like you, don't lease.

Do not lease a car if you don't normally take care of your cars and have them maintained regularly. Again, leases are designed around the assumption that a vehicle will have a certain predicted resale value at lease-end. This value can only be predicted if it is assumed that the vehicle will be in good condition with no damages. If you lease and return your vehicle in poor condition or with damages, you are expected to pay for the extra value depeciation. If you won't be able to handle those possible expenses, then don't lease.

Don't lease if you like to customize or "tune" your cars. Lease contracts generally disallow any modifications to the leased vehicle, which makes sense because the vehicle belongs to the lease company and not you. Some modifications may be made if they can be reversed prior to returning the vehicle at lease-end, or unless you absolutely know you will buy the vehicle when your lease is up.

Do not lease if you don't understand how leasing works. It is too easy to make mistakes, pay too much, and have dealers take advantage of you. You should understand the language of leasing, know how a lease contract looks, and how the lease process works. You should also be able to use a lease calculator to calculate your own monthly payments. Doing so allows you to check a dealer's figures to make sure there are no mistakes or hidden fees.

Summary
Car leasing is not for everyone. Many people lease when they should not, and for the wrong reasons. If you don't understand leasing and how it works, and know that you aren't well matched for it, then simply don't lease. You'll avoid the inevitable misery and financial pain that results.

For more, see LeaseGuide.com