Reasons Not to Lease a Carby Brandon M. Dennis
Long-Term Affordability<p>One of the main reasons that people choose to buy a car rather than leasing one is that <a href="http://www.businessinsider.com/buying-a-car-is-better-than-leasing-2012-5">purchasing a car is often more affordable in the long run</a>. Although purchasing a vehicle will cost more upfront, your monthly payments -- or maintenance costs -- will often be <strong>lower</strong> than when leasing a vehicle. For example, if you lease a $20,000 vehicle for five years with no down-payment and a 15-percent interest rate, your monthly payments would be roughly $350, plus the cost of any maintenance or major repairs that need to be performed during those five years. If you buy the same $20,000 car with a loan that cost you $5,000 down and 5 percent interest, your monthly payments would cost around $250 in addition to any maintenance costs.</p>
Ownership<p>In addition to a higher monthly payment, an auto lease doesn’t give you any ownership equity. That means that when the lease agreement is over, you’ll have to return the vehicle to the dealership and <strong>forfeit</strong> any money that you’ve put into it. If you purchase the vehicle, you’ll still own it after you’ve paid it off. Additionally, you’re free to make any changes to the vehicle that you want, such as painting the car or tinting the windows. You're also free to travel as far as you want, whereas a lease agreement <a href="http://www.leaseguide.com/lease10/">may restrict the number of miles</a> you're allowed to put on the car during your lease term.</p>
Resale Value<p>Since you don’t actually own a leased vehicle, you can’t resell it. However, you may be able to <a href="http://www.leaseguide.com/glossary/lease-takeover/">sublet the lease</a> to a third party or <a href="http://www.leaseguide.com/articles/trade-leased-car/">trade in</a> the vehicle to the dealership for a discount on a new car, according to LeaseGuide. If you purchase a car, though, you can resell it at any time for the residual value that is left in the vehicle.</p>
Even if the vehicle has depreciated in value, you can still improve the sale value by painting the car, tinting the windows or decorating the interior of the car.
Higher Insurance Requirements<p>Another reason not to lease a car is the <a href="http://www.leaseguide.com/articles/car-insurance/">higher insurance requirements</a> that most lease agreements impose on you. While you’ll still need basic insurance coverage either way, purchasing and owning your own vehicle will allow you to forgo the expensive collision and comprehensive coverage that you would otherwise be required to purchase.</p>