The difference between leasing and financing a car is that with a lease, the lessor has the right to take back the vehicle for any reason at all. this means they don't have to worry about maintenance costs, which is why it's cheaper for them to offer shorter leases–usually 3 years. the leasee doesn't have this same luxury. they should keep tabs on service intervals and hope their car doesn't need anything more than an oil change or tire rotation every few months. in other words, those who are good with money should avoid leasing as not doing so can lead to losing thousands of dollars if an accident occurs at the end of one's term because you'll be responsible for paying out monthly fees as long as possible
is it better to finance or lease a car?
generally, leasing is preferable to financing.
lessees can take advantage of huge tax savings by deducting the amount paid for leasing each year for business purposes. lessees also may be spending less money upfront or taking better care of their vehicle than if they bought it outright because they don't quite yet have the same emotional attachment as someone who owns their car does. however, lease contracts usually lock you into term lengths that are difficult to extend and expensive to break into should the lessee's needs change during that time period (plenty of other things can happen too). finance agreements will typically offer lower tax deductions upfront but often allow you either an easier ability to trade out your vehicle every three-years without penalty, or an easier
why leasing a car is a bad idea?
leasing a car is bad because it means you're not buying the car. if you don't own the car, then you can't wait for fundamental improvements in technology or changes in the future to make the investment worthwhile – they happen on your dime. and when it's time to give up on that lease agreement (and ideally buy out of it), there won't be any comparable vehicle worth considering. alternatively, if you owned that leased vehicle for several years and decide to trade it in, then at least you'd get some value out of your investment before giving that vehicle back.
what are the pros and cons of leasing a car?
there are many benefits to leasing a car. these include low monthly payments, reduced repairs costs, windfall when the lease is up, and high quality vehicles with competitive features for negligible cost.
however there are also drawbacks to leasing a vehicle including increased depreciation value due to higher mileage meaning more money out of your pocket in the long run even if you didn't exceed your mileage limit. to fight this people can use techniques like drive less and get more gas efficiency such as averaging over 30 miles per gallon (mpg). another drawback of leases is financing companies make it more difficult to get an approval on your lease which means you may need another co-signer or might not qualify at all; but pre-qualified leases make it easy
