Car leasing offers a variety of benefits, from affordability to flexibility, car leasing is the ideal option for many drivers in the UK. However, car leasing isn’t for everyone, and it does come with some cons as well as the pros. You should consider both the advantages and the disadvantages before deciding to sign onto a car leasing agreement.
Reputable car leasing company, All Car Leasing, discusses some of the disadvantages to car leasing, to offer insight into whether it could be for you or not.
Restrictions on Mileage
The large majority of car leasing deals have annual mileage limits, putting a restriction on how much you can use your lease vehicle. Exceeding these limits can result in an additional fee, which can become quite costly. This can be restrictive for those who frequently travel long distances and have unpredictable driving habits that could result in going over the limit.
If you’re someone that is out of these mileage restrictions, you may be able to negotiate more mileage for your leasing company, or leasing a vehicle might not be the most suitable option for you.
No Ownership Equity
With car leasing, you are simply renting your vehicle out for your lease duration. After your lease ends you have to give the vehicle back. Unlike purchasing a vehicle, leasing does not build any equity or ownership of it. This means that at the end of your lease you have no ownership or asset to trade in, which has its pros and cons.
However, in a certain kind of car leasing deal known as personal contract purchase (PCP), you do have the option to own the car after your lease duration. If you want to, you can pay a balloon payment and end up owning the vehicle if you wish.
Expensive Wear and Tear Penalties
Car leasing agreements require that you return your vehicle in good condition. Although wear and tear is normal, there can be costly charges for excessive wear and tear, so it’s important that you take care of your lease vehicle throughout the duration of your lease.
Damages beyond what is typically expected can be very expensive to rectify.
Potential Long Term Costs
Often, monthly lease payments are lower than loan payments, which is a big benefit to car leasing. However, if you plan on leasing for a long time, these costs can add up quickly and may even exceed the cost of buying a vehicle outright. So, if you’re planning on leasing for an extended period, it may become a more expensive option than anticipated.
When you lease a vehicle, there’s typically a restriction on making any modifications to it. This can be limiting to those who enjoy customising their cars to suit their personal style. Not having the freedom to do this may put some individuals off from beginning a car leasing agreement.
Penalties for Early Termination
One of the main drawbacks to leasing a vehicle is the commitment to seeing out your lease. Terminating the lease before the agreed upon date may result in a hefty financial penalty.