Thinking of Leasing

Just as anything which differs from traditional methods, vehicle leasing has many pros and cons, and depending on your lifestyle and preferences, the pros may very well outweigh the cons or vice versa. Now let us briefly outline some of the pros and cons when it comes to vehicle leasing:

Pros

• The main pro is that is offers much more affordable monthly payments than if you were to take out a bank loan in order to buy a new car. Typically monthly payments on a lease are 30-60% lower than equivalent car buying loans.
• You will always be driving a car which is under warranty.
• Your car will always be moderately new.
• You will constantly have the latest technology in your car which is important to many, especially if you value safety features.
• Low or no down payment. You may even end up with cash in your pocket from your old vehicle. Example - you sell a used Nissan Pixo for £4,000 and put down only £1,800.
• You don’t have to lay down a huge amount of cash at any one time, you spread a fraction of the car’s capitalized value across a longer period of time or ‘term’ (common terms last for 36 months).
• You don’t have to worry about re-selling your car at the end of the term (although don’t be fooled into thinking that you don’t need to care about the residual value as the predicted residual value will affect how much you are paying month to month).
• Once the lease has ended you can just walk away

Cons

• Whilst lease monthly payments are a lot cheaper than that of a loan to buy the car, remember that you are not spending your money on the same thing, the buyer gets to keep the car at the end of their loan term, whereas a lessee does not, so it should be a lot cheaper!
• In the long term, if you continuously lease you will likely end up spending a lot more money than you would have done if you had just bought the car (despite this some people still prefer to make the smaller monthly payments as it is what you can afford at the time, and some don’t have time to save, also you get to change car every couple of years).
• You don’t ever get to own a car which is off putting to some people as properly owning a car is something romanticise about.
• You can’t personalise or modify a leased vehicle
• Dealers can be a little hostile when it comes to disclosing exactly what you are paying for with a lease, especially when it comes to what is known as the ‘money factor’ which is a leases equivalent to the interest on a loan.
• Mileage limits are part of all leases, so you can’t realistically go on any spontaneous road trips to the other side of the world. Mileage limits are usually around the 10,000 to 12,000 a year mark.
• Leases are not very flexible and once you have committed to one they are tricky to get out of and you will usually face having to pay a cancellation charge.