Why Experts Say Leasing A Vehicle Is A Bad Idea – The Pros & Cons Of Leasing In Louisiana

What do you like the most about a new car? For me, it's the smell of a new car. There's nothing like it. Right? However, like most people, that wonderful new-car smell wears off quickly when you have to pay that first note. Then, when the reality sets in, and the expenses of your new vehicle start to impact your monthly income like full coverage insurance.

Today, vehicles are not only ridiculously expensive, they are way, way overpriced. Some people choose leasing a vehicle because they don't want to deal with an aging vehicle and the long-term maintenance issues, others make a sizable income and can weather the leasing-forever car note. Whatever the case, the experts at supermoney.com say you it's not always a good idea.

WHAT'S THE DIFFERENCE BETWEEN LEASING AND BUYING?

Leasing a car means you drive it for some time, per the lease terms, then give it back. Buying a car will pay off over time. The longer you keep a vehicle after it's paid for, the more value you get from the purchase. Consumer Reports points out there are pros and cons to leasing a vehicle.

THE PROS OF LEASING A CAR

Access to High-End Vehicles - Leasing makes it possible to drive higher-end cars at a lower monthly cost compared to purchasing. Additionally, short-term leases (typically 2–3 years) allow drivers to regularly upgrade to newer models with the latest features.

Financial Benefits - Leasing often comes with perks such as lower upfront costs, warranty coverage, and free routine maintenance. These monetary advantages make leasing an attractive option for budget-conscious drivers.

Protection Against Depreciation - When you lease, you’re safeguarded from unexpected drops in a car’s market value. If the car depreciates faster than anticipated, you won’t bear the financial loss. On the flip side, if the car retains its value well, you can often purchase it at the end of the lease for a favorable price, either to keep or resell.

Option to Purchase at Lease-End - If you grow attached to your leased car, you usually have the option to buy it at the end of the lease term. The price is typically based on the car’s residual value, plus any associated fees. If the purchase price is lower than the car’s current market value, it can be a smart financial decision.

Lease Transfer Flexibility - Leasing offers flexibility if you change your mind about the car. In many cases, you can transfer the lease to another driver for the remaining term, provided your lease agreement permits it. While a transfer fee may apply, this option allows you to exit a lease early without being stuck with a vehicle you no longer want.

THE CONS OF LEASING A VEHICLE

Ongoing Payments with No Ownership - Leasing requires continuous monthly payments that don't end, whereas buying a car means you can eventually pay it off and drive it without further payments, allowing you to maximize its long-term value.

Higher Insurance Costs - Lease agreements typically demand more comprehensive insurance coverage since the leasing company owns the vehicle. In contrast, when you buy a car, you have more flexibility to choose coverage options.

Mileage Restrictions - Lease agreements often come with mileage limits, and exceeding these limits can result in costly penalties, sometimes ranging from 10 to 50 cents per mile. Plus, unused miles don’t count toward any future savings.

Required Gap Insurance - Gap insurance is necessary when leasing to protect against the possibility of owing money on a car that’s totaled in an accident. Without it, you'd still be on the hook for payments despite no longer having the vehicle.

Maintenance Fees - While you lease a car, you’re expected to maintain it in near-perfect condition, aside from normal wear and tear. Any excessive wear or damage could lead to expensive fees when you return the vehicle.

No Personalization - Leasing agreements often prohibit any customization of the car. This means no upgrades, window tinting, bumper stickers, or other personal modifications are allowed.

No Equity at the End of the Lease - Lease terms typically last between 24 to 48 months. At the end of the lease, you return the car and walk away with nothing to show for your payments—no trade-in value or ownership.

Higher Overall Costs - Leasing can be more expensive in the long run because you’re essentially paying for the car’s depreciation, along with interest, taxes, and additional fees.

Unfavorable Buyout Price - If you choose to purchase the vehicle at the end of the lease, the buyout price is often inflated and higher than the actual market value of the car due to depreciation and amortization.

No Asset to Keep - After completing all the lease payments, you return the car with nothing to keep. Unless you choose to lease another car, you walk away with no equity or trade-in value.

THE BOTTOM LINE

There’s no one-size-fits-all answer to the question of leasing vs. buying. Your decision should depend on your financial situation, lifestyle, and long-term goals. For some, the flexibility of leasing works well. For others, the long-term value of owning a car is unbeatable.

If you’re considering leasing, do your homework. Compare options, read the fine print, and understand all the terms to ensure it’s the right move for you. Whether you lease or buy, make sure it aligns with your needs and financial plans.