Car leasing, or paying monthly for a car rather than buying it outright, is an option that many are turning to as car prices increase. However, there has to be a downside to an option that seems to be so beneficial; here, we take a look at some of the risks involved in leasing a car, to help you decide whether it’s the best option for you or whether it would be better to keep saving to buy your own. Remember though, that even though there might be risks, sometimes it might be more beneficial to you, to lease your car.
First of all, even car leasing requires some saving in order to be able to put down an initial down payment. The car’s provider is taking a risk in letting you use the car without you having paid for it, in case you crash it or damage it in some way, and the down payment works as a form of deposit so that they’re protected. If you have a questionable credit history, you will usually be asked to pay a larger down payment, and depending on how much this is, it might reach the point where you could buy a car outright and avoid the future paymentsaltogether.
You can control the amount you have to pay every month by choosing an affordable car and a payment plan that suits you, but just like paying rent for a property, your money is not going into your own pocket. For this reason, it can be difficult to stomach, especially if your payments increase with inflation or other economic changes.
Most leases are spread over a few years which is a big commitment, especially considering how quickly car models go in and out of fashion. Your life can take a number of twists and turns during that time, some of which could mean that you are no longer able to make your payments. However, if you terminate your agreement early you not only have to pay a fee, but you would also lose your down payment. Luckily there are companies like swapalease which allow you to swap to a different lease, such as an i3 lease, part way through your agreement. This can help you not lose your money and can also make things better for you as you could get a better model of a car. It’s a win-win for everyone involved.
As well as financial pressure, when you lease a car you are obliged to look after it well. If you damage it in any way, whether it’s a dent in the bumper or a stain on a seat, you have to pay a fee. It can be easy to forget that you lease your car, and you can find yourself treating it as if it’s your own andbeing a bit too relaxed when it comes to keeping it clean and well looked after.
In most cases, you would have to have it professionally cleaned before giving it back. Another limitation is mileage. For most lease agreements there is a maximum number of miles you’re allowed to do per year in order to maintain the longevity of the vehicle, which is another thing that it would be quite easy to forget, resulting in, of course, another fee!
Although the option of being able to pay monthly for a car is a great solution if you’re in desperate need of one but don’t have the money to pay for one outright, or even if you want the latest model but want to avoid the depreciation in value. However, it is really important to read the small print of a lease agreement before you go ahead, as there can be a number of hidden fees attached. For more advice on financial issues such as the different types of mortgages that are available, check out workingdaddy.co.uk.