Car Lease? Just Say No.
Guest post today from fellow blogger and self-improvement specialist Jacob Merkley. Enjoy! – Kurt
Today, cars are incredible machines. Not only do they last longer than they ever have before, but they are also equipped with some incredible technology. The new cars coming out this year have automatic high-beam control, night vision with pedestrian detection, GPS vehicle tracking, and in-car internet (binge watching Netflix on a road trip…it’s coming).
This increase of technology is enticing many to get their hands on a set of keys for one of these newer cars. Never before have cars incorporated so much luxury. Because of the increase of technology and gadgets that these cars have built in, the price of buying a car is increasing dramatically. Those increasing prices then lead one to consider whether buying or leasing is the best option.
While having the new car smell every two or three years is incredibly enticing, for most people leasing is still not the best option. Today I want to show you why.
Advantages of Leasing a Car
There are some major advantages to leasing a car, namely:
1. You have a low down payment at the time of contract (or none at all).
2. You drive a newer, more equipped car than you otherwise might be able to afford buying.
3. The car is usually covered by the manufacturer’s warranty, reducing maintenance costs.
Unless you are in a position at work where you need to smooth talk clients, leasing a car over the long-run just isn’t worth it.
Why You Should Not Lease a Car
Here are some reasons why you shouldn’t lease a car:
It’s Expensive in the Long Run
The leasing contract is set up in such a way that you will be paying for the use of that vehicle for the life of the contract (two or three years). Once your lease is over, you either have to lease another car or purchase one. Either way, you’re going to have monthly payments for a really long time. In the end, you don’t get much out of that car when you turn it in, as you don’t own it.
Purchased Car: It’s cheaper in the long run. You gain equity in that car with each payment you make. When your car has been paid for, you continue to gain value the longer you have it.
You Have Limited Miles
Most contracts have driving limits between 10,000 and 15,000 miles per year. If you need to drive more, you get penalized. If you drive less than that, you don’t get credit for the unused miles.
Purchased Car: No limits. You are in control of how many miles you want to put on your car. Driving too much will lower the resale value, but it’s still your choice.
High Insurance Cost
Insuring a leased car is expensive. Not only are you insuring a brand new car (which is always expensive) but then you need to maintain a certain level of insurance to satisfy your leasing contract.
Purchased Car: You can choose what level of insurance makes sense for your situation, often resulting in lower costs. In addition, insurance companies give a discounted rate when you actually own the car.
The Condition of the Car Matters
When you go to turn in the car, the dealership will look for excessive wear-and-tear. If you have any sort of internal or external damage you will be stuck with the bill. No questions asked.
Purchased Car: Excessive wear-and-tear may result in a lower resale value; however, you won’t get a major penalty or fine because the car is yours, not the dealership’s.
Hard to Cancel
If your lifestyle changes and you want to get out of your lease, you may be out of luck. If you can get out of your lease, you better be aware that you will get stuck with a hefty early termination penalty that is due the minute you cancel.
Purchased Car: If you don’t like your car, you can sell it or trade it in for a new car. You will have equity in the car even if you haven’t paid off the loan yet, so you get some value from it.
You Aren’t in Control
This is an overarching statement, but you just aren’t in control of the car. Why? Because it’s not yours…it’s the dealership’s. You are not allowed to customize your vehicle in any permanent way. No new gadgets. No new car paint. In the end, it’s not yours to change.
Purchased Car: You are in complete control. You have the choice to change it in anyway you like.
To Sum Up: When It Comes to Car Leasing, Just Say No!
As you can see, there are many disadvantages of leasing a car that outweigh the advantages.
When you purchase a car, it’s yours; no restriction, no cancellation problems, and it’s ultimately cheaper in the long run. So the next time you are shopping for a car, tell the salesman “no” when they ask if you want to lease the car. Instead, save some more money before you go and buy a car that is yours until you choose to be done with it…and you’ll still get the new car smell!
After spending six years in the accounting, retirement, and financial realm, Jacob turned his attention to teaching others about important life skills. He works with clients one on one, in addition to teaching others through his website PowerOverLife. Jacob currently lives in Gilbert, Arizona with his wife and ten month old daughter.