This post may contain affiliate and/or partnered content. Please read our disclosure for details.
Leasing a car is a popular alternative to buying a car. It can provide many people with easier access to higher value vehicles – including brand new cars and luxury cars. Leasing also enables you to trade in your car every few years for a new model without going through the hassle of selling it.
This can all make leasing seem very attractive, but there are few things that people typically don’t know about leasing before they get involved. Such overlooked details are useful to know about beforehand to ensure that leasing is the right move for you. Below are 7 examples of things you may not have known about leasing a car.
You cannot modify leased cars, but do still have the responsibility of maintaining them
Not owning the car means that you cannot freely modify it. Temporary modifications are usually allowed (such as phone mounts, seat covers and sometimes vinyl wraps) because these can be removed before you trade the vehicle back in. However, you cannot make permanent modifications such as modifying the engine, upgrading the suspension or repainting the vehicle/adding decals.
This is similar to the restrictions that are in place when renting a home. The difference between renting a home and leasing a car is that you are still in charge of maintenance. While there are some lease packages out there that may cover basic maintenance like oil changes or even tire replacement, most lease agreements do not cover this – so be prepared to still pay for all of this.
Exiting your lease early can come with a big fee
When you buy a car, you can sell it at any time and get a new vehicle. With a lease agreement, you usually have to stick with a vehicle until the lease term is over. If you try to exit your lease early, you may have to pay an expensive exit fee. This is something to watch out for before entering a lease agreement.
You can sometimes buy out a leased car
At the end of your lease term, the lease company may allow you to buy the vehicle. Just be wary that you may have to pay more than the average market price, and all your prior lease payments will not count towards it.
There are some companies that can help negotiate the end of auto lease contracts, allowing you to buy your vehicle before the term is over. The possibility of this depends very much on the conditions of your lease.
There can be wear and tear fee when you return a vehicle
Many lease companies will require you to return the vehicle in good condition. If there is damage you may have to pay a wear and tear fee. This fee will vary in cost depending on how damaged your car is. This means that you often have to drive a leased vehicle more carefully and carry out stricter maintenance. Always ask about this fee when taking out a lease agreement so that you know exactly what counts as wear and tear.
Insurance for leased cars can often be more expensive
Insuring a leased car can be more expensive than insuring an owned car. This is because drivers that lease are more likely to make claims to keep their vehicle in good condition in order to keep to their lease agreement. If you are a relatively new driver, you may even find that insurance rates are too expensive when leasing a car.
Leased cars can come with mileage restrictions
A lot of leaseholders will put mileage restrictions in place. If you return a car having done more miles than the mileage restriction, you may have to pay an extra fee. This is not ideal if you plan on doing lots of long drives. Mileage restrictions can vary, but most are based on the average amount of miles a driver does per year in your state.
Leasing is generally more expensive in the long run than buying a car
Buying a car saves you money in most cases. Even if you’re buying a car on finance, instalments with interest will generally cost less than monthly lease payments. And you have the opportunity to eventually pay off your loan – when you lease, the payments never stop. When you factor in the higher insurance rates and possibility of extra fees at the end of each lease term, it’s clear that leasing can be a lot more expensive. Make sure that you budget for this.
