Advantages and Disadvantages of Leasing a Car

Published: 14th June 2010
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Buying a car will be one of the bigger purchases you make in your life, aside from a house. Real estate appreciates in value, but cars very rarelyLeasing a car is a very common practice these days as it allows you to get a new one at a low monthly payment. Then after your lease is up you can buy it or pick up another new car lease. There are advantage and disadvantages to leasing cars though and you should make sure you know the pros and cons before you sign on the dotted line.

The biggest advantage of leasing is that you don't need a down payment or a very low one. No need to save a couple thousand dollars to get a car, just pay the monthly payments! There are also no maintenance worries because the vehicle is brand new. Just keep up the maintenance such as the correct gas for the auto, get the oil changed and that should be it. If anything does break down or go wrong, just take it back to the dealership. They own the vehicle and will fix the problems.

Another big advantage is that you're driving a late model new car every few years. You can keep up with the Jones' in style by leasing a car. If you need a late model car for business reasons such as a salesperson, or insurance agent then leasing makes financial sense. You won't take that huge hit driving the car off the lot because you don't own it! The last reason leasing is advantageous is that you can get more car for your buck. You can drive a higher priced car than you would be able to afford if you were buying the car. The car lease payment will always be lower than actually buying the car.

There are some disadvantages with leasing a vehicle though. The main one is that you will always have a payment. If you bought it new, you'd eventually pay it off after a few years and not have a few hundred dollars going to pay the car. But with leasing a car, you have a monthly payment that doesn't go anywhere. You don't own the car at the end of a lease and have to buy it or lease another car. Instead of paying for a car payment for five years, and then owning the car with no payment and still driving the car for another five years, with leasing you'd be making a car payment every month of those ten years.

With leasing, you're basically renting it and with renting comes the mileage and damage restrictions. You can only drive so many miles a year on a leased auto for free. After that you have to pay quite high for every mile over that limit. Damage to the auto such as not keeping the vehicle up to dealership standards incurs some pretty heavy penalties also. do. You can though with some research and knowledge find a car that will still be worth what you paid for it when it comes time to sell it. You can even make some money on the sale! As you've heard before, something is only worth what someone is willing to pay for it.

Most car consumers reference a book value to determine what a used car is worth. These numbers are just ballpark though and not a strict guide. Actually some of the books are off by thousands of dollars. Kelly Blue Book is typically too high for regular car values and too low for collector cars. Those values are not based on sold prices of real cars, but are theoretical values.

Another way to determine used car value is to see what everyone else is paying for the same car. You can look on websites to see what people are asking for the cars, but not see actual selling price. Dealers have access to software that allows them to see the actual sales prices of every type of vehicle sold at dealer auctions across the country. But you have access sold prices of cars as well by using eBay. Search the completed listings to find the sold price. You can even look at reserve auctions where the car didn't sell and see how high the car was bid. Whatever it was bid up to, is what the car is worth.

Now you have documented sales for all types of vehicles and have serious leverage against a seller for the vehicle you're interested in buying. Show them what that car has been selling for on eBay and then start negotiating. Some may not want to haggle but keep at it and someone will jump on the price you're willing to buy for.

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