Car Leasing Pros and Cons – Explained

Advantages and disadvantages of car leasing

Car leasing provides worthwhile benefits to many people looking for a new car. Although leasing offers lower costs than buying with a loan, which is the primary attraction, it is not right for everyone, especially those who drive an unusually high amount of miles.

Leasing is designed to provide the greatest benefits to those who drive an average number of miles, take good care of their cars, like having a new car every 2-4 years, and won’t want to end their lease early.

The disadvantages of leasing will most affect those who don’t fit these characteristics.

Let’s now take a look at the specific pros and cons of car leasing:

Pros of Leasing

•Monthly payments are 30%-60% lower than loan payments for same car
•Down payment is usually not required when leasing
•Most leases have built-in GAP insurance to protect customer against accident loss
•Avoids hassles of getting rid of used car at lease end
•Customers often end up with equity that can be used in trade for new car
•Have option to buy car at lease-end for guaranteed purchase price
•Saves money on sales tax in most states
•Car is always under manufacturers’ warranty
•Promotional lease deals from manufacturers are usually better deals than rebates and low-interest loans

Cons of Leasing

•Make first monthly payment at time of lease signing, not month later
•Because leasing is more complex than buying, mistakes are easier to make
•Must drive no more than mileage allowance — usually 10K, 12K, or 15K miles per year
•Low lease payments generally don’t create ownership equity
•Insurance requirements higher than most state minimums
•Security deposit may be required for customers with poor credit score
•May be charged at lease-end for excessive mileage and wear-and-tear
•Not allowed to make modifications to vehicle that can’t be reversed prior to return
•Difficult and expensive to end lease early


Leasing, like anything else, has advantages and disadvantages, pros and cons.. Potential leasing customers must evaluate their own individual situation and determine whether the benefits outweigh the drawbacks. The alternative to leasing is, of course, buying with cash or with an auto loan, both of which have their own pros and cons.


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