6 Disadvantages of a car lease

Car lease is a common option for individuals who are not capable of buying a car. This is also an option for individuals who want to switch vehicles every now and then. Just like buying a car through a car loan, lease involves monthly payments, interest rates, and credit checks. There are also differences between the two. In financing a car purchase through loans, you can actually own the car as soon as you pay the loan off while in leasing you need to return the car to the leasing company where you obtained it when the lease term ends. Besides these, there are other disadvantages involved in a car lease. Some of these are included in this article to provide you with greater understanding and this includes the following.

Payments and costs involved

Leasing a car is actually expensive compared to buying a vehicle through auto loans. This is because there are many fees involved in leasing that are not found on car loans. These fees include leasing costs and financing charges.  Besides this you might end up paying more on the interest since most car lease terms covers 3-5 years and these are similar to long term car loans. Due to this, you would be paying for the interest for a long time which is basically expensive and the sad thing is you will not own the car after the lease term ends.

Mileage limitations

Another disadvantage of car lease is the mileage limitations attached to it. This simply means that you have a definite mileage limit for a single year. In case you go beyond the limit indicated on the lease contract you are required to pay for penalties on a per mile basis. This is disadvantageous compared to financing a vehicle through an auto loan that does not involve annual mileage limitations.

Charges for early termination

In case you want to get out of an expensive car lease earlier that what is indicated on the lease term, you are required to pay for the early termination charge. This condition is quite disadvantageous compared to car financing because termination fees are not found in car loans in case you want to cancel the loan you have.

No customization policy

Car lease is also disadvantageous since you cannot customize the vehicle to fit your driving needs. Most lease agreements specify that you are not allowed to customize the car while you are leasing it and this could mean penalties if violated.

Costs of insurance

Car leasing also involves higher insurance costs. This is because insurance companies place higher premiums on vehicles that are subjected to lease compared to vehicles financed through car loans.

No ownership policy

Car lease is an arrangement that is similar to car rentals. This simply means that your payments are intended to pay for your utilization of the vehicle and at the end of the lease term you don’t own the car. You are only offered to either buy the car you leased or sign a new lease agreement again involving a different vehicle.

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