The popularity of leasing a vehicle continues to grow each year. In fact, the Lease Market Report published by Edmunds in January 2017 revealed that lease volume has grown by an astounding 91 percent in the last five years. The report also points out that consumers are attracted to the low payments, which average $120 a month less than a financed car. If you're considering leasing a car instead of buying one, you'll need to understand all of the terms before signing on the bottom line, including who is responsible for maintenance.
TL;DR (Too Long; Didn't Read)
When leasing a car it is common for some maintenance to be included in your warranty plan. If you do not opt into this type of warranty plan all of the maintenance will be your own responsibility.
Understand What Leasing Entails
When you lease a vehicle, you are basically agreeing to a long-term car rental. You won't own the vehicle, although you will have the opportunity to buy the vehicle after the lease is up. While lease terms may vary, most contracts are for 36 months. During that time you'll pay a monthly fee, and you'll be responsible for any maintenance and repairs laid out in your lease contract.
Know Your Responsibilities
It is important that you know your responsibilities when you lease the car so you don't receive unexpected charges when you turn in the vehicle at the end of the lease term. Always review the lease contract carefully and go over any of the listed rules that you do not understand with the car dealer. For example, the lease may approve yearly mileage in the amount of 10,000, 12,000 or 15,000 miles per year. If you go over that, you will be charged a fee for each mile above the limit.
Review the Pros to Leasing
There are several pros to leasing a car versus buying one. You'll not only have the opportunity to drive a newer model at a lower rate, but you'll also be covered by a manufacturer's warranty should anything go wrong with the automobile. Of course, newer vehicles are also considered safe because they break down less often than used cars. As a result, the amount of required repairs should be lower. Finally, you won't have to worry about selling your car when the lease is up. You can return it and lease another vehicle or purchase it for the buyout price listed in your contract.
Examine the Cons to Leasing
While some dealerships include maintenance in their lease contract, most require the borrower to pay the upkeep expenses. The contract may also list penalty charges for those who lease the vehicle and then do not keep up with the manufacturer's suggested maintenance schedule. Typically, these charges are associated with any repairs the vehicle needs, as not completing the required maintenance may void the warranty altogether. Another con to leasing is that you'll always have a car payment. Additionally, getting out of the lease due to unforeseen circumstances can be costly. You'll be charged a hefty early termination fee.
Alicia Bodine is a New Jersey-based writer specializing in finance. With more than 13 years of experience, her work has appeared in LendingTree, GoBankingRates, Sapling, Zacks and Pocket Sense.