What are the down sides to leasing a car?

Question

If the car you are leasing was hit and then totaled ny the insurance company, do you have to continue to pay for the car or what?

Answer 1

you lease a car, you still need to buy your own auto insurance policy. The auto dealer or bank that is financing the car will require you to buy collision and comprehensive coverage. You'll need to buy these coverages in addition to the others that may be mandatory in your state, such as auto liability insurance.


Collision covers the damage to the car from an accident with another automobile or object.


Comprehensive covers a loss that is caused by something other than a collision with another car or object, such as a fire or theft or collision with a deer.
The leasing company may also require "gap" insurance. This refers to the fact that if you have an accident and your leased car is damaged beyond repair or "totaled," there's likely to be a difference between the amount that you still owe the auto dealer and the check you'll get from your insurance company. That's because the insurance company's check is based on the car's actual cash value which takes into account depreciation. The difference between the two amounts is known as the "gap."

On a leased car, the cost of gap insurance is generally rolled into the lease payments. You don't actually buy a gap policy. Generally, the auto dealer buys a master policy from an insurance company to cover all the cars it leases and charges you for a "gap waiver." This means that if your leased car is totaled, you won't have to pay the dealer the gap amount. Check with the auto dealer when leasing your car.

Answer 2

The insurance company should cover your lease, and you shouldn't have to pay for it. The biggest downside is the mileage restrictions. If you go over a certain number of miles in a year, the dealership you leased from can charge you a rate for EVERY MILE you go over. However, an upside would be that you will never be able to find a better warranty then if you lease a car. The dealership will cover just about anything on the vehicle when you are leasing. Another upside is that you get a brand new car every two or three years.

Answer 3

1. You don't own it.
2. You're limited to the number of miles you can drive it.
3. If you don't have gap insurance and total it, you may be left with a huge payoff even after the insurance company settles.
4. The lease company's definition of "normal wear and tear" is probably MUCH more conservative than yours is. You'll be charged for every nick, ding, and smudge on the car at turn-in.
5. Early termination charges are huge if you need to cancel the lease. (A total loss is considered an early termination, by the way. See #3.)

Leasing is normally a terrible idea for the average person. It can be a good idea if it's used primarily for business use and you can accurately predict the number of miles you'll drive it annually. And NEVER lease a vehicle that has a low resale value!

Answer 4

IMO, the most obvious answer to the question itself is never lease anything if you dont have to. You really should pay cash for a car because of all of the accumulated intrest on the loan that you end up paying over the years that you have the car. Its a much better idea to get a car that is a couple of years old that is already paid for. Therefore, you do not need full coverage on the insurance and you are not paying interest. If you get a book called 'The millionaire next door' it will validate my answer to you. Look at the stats of the folks with money vs people without money.

Answer 5

If the car was totaled out by the insurance then they should give you the value for the car...which should be enought to pay it off or replace it. If you are just keeping the money then yes you will have to pay for it. Insurance will be affected either way. other downsides to leasing a car. It basically a long term rental, with mileage restrictions. You never own the car, and just make payments to have restricted driving priveleges. The only way this would work out in your favor is if you like to drive alot of different cars in a short amount of time.....or, if you take vary good care of it and sell it after a couple years for more then its worth.

Answer 6

No. You are insured, the car is insured, and all your insurance company or the insurance company of the person who hit you has to do is pay for the car. That will be done.

The downside is the amount of mileage you can plan on puttin gon the car. Usually the limit is 12,000 p/y. If you put more on it, you pay $.40 per mile - that can add up!

So, if you put on less than 12K miles per year on a car, then leasing is for you! If you put more on, then think about buying the car instead.

Answer 7

the up-side is if you lease for a long time you will always have a new car!, anyhow, leasing contracts are usually the same. Leasing a vehicle limits you to a certain amount of miles per year depending in the area you live in. Also, your basically "renting" the vehicle and don't gain anything on your money in the end of the lease. if your not concerned about limited milage, the low monthly payments of lease may be suitable for you, alex

Answer 8

You are responsible for the entire lease period. If the insurance company pays it off you are ok.
The other issues are the mileage you will have to stay under and the fact you do not have any property when the lease is up. Either you pay a residule or turn it in.

Answer 9

I'm guessing you had full coverage...so your insurance company should give you the money that you owe, leasing a car is never a good idea, it's never really yours and every time you drive that car you are responsible for someone Else's property.

Answer 10

i dont know how that works.id say the lease would be paid off..since at the end of the lease you have the option to purchase

but leasing you have to watch mileage..but payments are less then purchasing...

also with leasing the car must be kept in pristine condition interior and exterior (no dings,dents ect..)