Learning the risks of leasing a car is important even if you don’t have any intention of leasing a car. That’s because when you know the risks and the rewards of leasing a car, then you can realistically weigh the pros and cons. By doing so you might just find out that leasing a car makes solid financial sense for your situation.
It is true there are risk involved in leasing a vehicle. But the truth is there are risks involved in buying a car, too. The trick is knowing which risks will apply to you and how to manage the risks.
Probably one of the biggest dangers, when leasing an automobile, is going over the allowed mileage. When you are leasing a vehicle, the company makes money by essentially charging you for the depreciation. Basically this means that to make money, they need to get the car back in good condition, because they need to be able to sell it after you’re done using it.
Because of this, all leases have clauses that limit the amount of miles you can put on them. If you go over this limit, you’re going to have to pay, typically quite a lot, up to a quarter or more per mile. This can get expensive fast, so if you have a commute that will put you close to the limit; you really need to consider that aspect.
Another of the larger risk is that if you are unable to make the lease payments, you’ve got no equity in the car. Whereas, if you make four years of payments on your own car and are then unable to keep paying, you can at least sell the car and hopefully cover the rest of the cost.
But with a lease, you don’t have equity, so if you find yourself in a bad financial situation, then you’re going to be left with nothing. The sad thing you’ll still be on the hook for the payments, even if you give the car back. You will either have to pay the rest of the lease, pay a huge termination fee or arrange a lease transfer.
This is a particular problem if you’re using a lease to allow you to drive more car than you can reasonably afford. This is an all too common reason for getting a lease, and should probably qualify as one of the risks of leasing a car in its own right. Dealers will often try to sell you on the idea of driving a car you wouldn’t able to own as a reason to lease.
This is an argument that you should never pay attention to. Leasing is a good idea for people who changes cars every year, or are planning a change in lifestyle a couple of years down the road. But using them to try and impress your friends or even yourself is a bad decision. The economy is far too unstable to do that, and it’s not wise even when the economy is stable.
If you know the risks of leasing a car, it can be a good choice, but you need to go into the process clear eyed and with a level head. If you do that, you will be able to make the choice that gets you the best car.
By: Shane Smith. If you are looking for landscape or backyard lights then check out: http://makevoltz.com
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