What are the pros and cons of leasing a car?

Question

I can't see any flaws in leasing, except that there is a possibility of having to pay for extra mileage. My boyfriend worked for a car dealership temporarily and overheard another salesman saying "leasing is the smartest thing to do, but don't tell customers that".--Because they obviously miss out on commission. So what are your thoughts?

The money you pay towards the lease goes towards the purchase price right? Then at the end if you decide you don't want the car.. the $ goes into your choice of a new car?

Answer 1

There are various leasing plans and some do require that you maintain the automobile, and all have a limit on your yearly and total mileage if you exceed you will pay a penalty. You also have to return the car in a reasonable condition, no big dents, scratches, etc, just normal wear and tear. With a lease your payment is definitely lower, but at the end of the lease term you do not own the car although you can buy it for the residual or even finance the residual (not a good idea).

Buying the car requires more money up front in order to get your payment down to compare with a lease, although a lease nowadays does require some up front money. In the old days you leased with no money up front at all and then it was really good.
The plus of course to buying the car is you can negotiate the price, you own the car when you finish paying for it, no mileage restrictions.

I don't know where your boyfriend worked but selling or leasing a car gets the salesman the same commission, in fact sometimes a lease can bring in more commission.

Good luck - I just always suggest that you never buy a brand new car you lose too much on the depreciation. Lease returns, rental returns, repos, etc., are the way to go.

Answer 2

Pros: you are basically renting a car for 2 to 3 years. Great if you absolutely must have a new set of wheels every few years, with no hassle at the end. Or if you are staying in an area temporarily and you don't or cannot afford to bring the car back (eg out of country.) Cons: on a per-mile basis, it's the most expensive way to pay for transportation. You are basically paying for depreciation and paying to borrow money, and at the end of the lease, you have nothing to show for your payments except 24 or 36 canceled checks. (The dealer sets the initial purchase price - the 'cap cost', the interest rate, the residual value. You get to decide how much you want to put as a down payment, the number of years for the lease and the annual mileage. Advantage: dealer.) If you are in business, you can deduct your business transportation expenses in a number of ways if you own your vehicle - either by the IRS standard mileage rate or by adding up all the actual expenses including depreciation. Deducting lease payments is a very simple way to do the accounting, but your business expense is higher and your profit is lower.

Answer 3

HUGE CON: they put a limit on how many miles you can drive in a year and if you go over that ammount you pay out the you-know-what for every single mile you go over.
This happened to my mother in law and she ended up owing hundreds of dollars when she returned the car, and she hadnt even driven a lot over the set ammount.
I dont think youre right about the "the money goes to the purchase of the car, or if you dont want the car the money goes to the purchase of whatever car u want"... if you dont buy the car you leased you loose the money. like a rental

Answer 4

If you are somebody who doesn't want limitations, dont do it. If you are someone who rarely drives, with no children, I say go for it. I handled leased vehicles in my last job and let me tell you, people are never fully informed of the if, ands, & buts of leasing. It goes further than just overage on mileage. If you decide you want something else before your lease is over, its hell. And the msrp after leasing if you decide you may want to buy the vehicle, will leave you stuck in a true rut

Answer 5

I don't think leasing is smart at all. You pay all this money to use a car and it never becomes yours. If you can afford to make the payments to lease a car then you might as well buy one. Leasing is just throwing money away.

Answer 6

Leasing means no maintenance, but watch out for going over the milage.

Answer 7

what if my dog rides in the car/ pet hair, etc