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Car Lease: Good Or Bad Investment? - Classi Blogger

Car Lease: Good Or Bad Investment?

Many times, you must have heard that leasing a car is a very bad deal, isn’t it? In several cases, you might feel that buying a car is a great option; however, keep in mind that leasing is not a bad choice always. Just like every coin has 2 sides, even leasing a car has its own pros and cons.


Approximately 20 percent of new car transactions are on the car lease and hence, it clarifies the fact that there are people who still love and consider this option. Well, leasing the car depends on various factors which include how much amount you can afford (Monthly installments and up front), how long you need to drive and much more. Let us have a look at the pros of investing in car lease:

New car

When you lease a car, you get a chance of driving around just like a new one. Many people find it as an excellent alternative and it is a big perk for people who love driving and cars.

No maintenance

Since a newer car is being used, there is no need of worrying about maintenance issues at all. Usually when vehicles age, lot of maintenance hassles pop up, In case you drive a lot or in case you drive on bad roads, car leasing is perfect, as there is no stress at all.

Leasing a car is tax deductible

In case you own a small business or if you are self-employed, the lease can be written as a business expense. This means, it is tax deductible, which is once again a favorable thing.

One can afford a nice car

There are hardly any people who can afford Range Rovers and BMWs. However, research shows that around 80 percent of luxury cars are leased. This is because getting loans for these luxury cars is quite difficult. If a person wants a car over $30,000 and if he is not getting a loan from the bank, the only option available is leasing. Moreover, the monthly installments are very less as compared to the amount that you need to pay while buying a car. Even if you can’t buy a new car, you can afford a nice one with the option of “Leasing”.

Few upfront fees

Now when we talk of costs, leasing allows a person to get away with limited upfront fees. There is no necessity of down payment. Moreover, monthly installments are going to be lower and due to this, even the sales tax is reduced. This implies that during lease life, roughly 50 percent of sales tax will be reduced.

Just like the pros, let us have a look at the cons as well:

Even after accident, there is no change in the lease contract amount

If the vehicle is totaled and if you get in an accident, you would be responsible for paying the full lease amount as mentioned in the contract. At such times, even the insurance company isn’t of any help. When you go for the option of the lease, ensure that you purchase the gap insurance, which offers sufficient coverage.

Limits on distance and time

The majority of the times, the term of the lease agreement is 5 years and the distance is limited to 60,000 miles. However, if you want to exceed the limit, you need to pay a penalty for the same. Yes, with car lease, the miles are “Budgeted” and this can add frustration and stress to your life. Obviously, mileage can be negotiated, but this is considered to be the major drawback for most of the people. On the contrary, if some miles are saved, you don’t get any credit for the same.

Payment liabilities

If you lose your job or face financial hardships, then it is going to be tough for you to afford payments. In such cases, the car will be recovered by the dealer and would be sold at auction. However, if the car is sold for less, as compared to the actual cost, then you might be responsible for paying the rest.

Even though you don’t own it you have to look after repairs

When you lease a car, you need to handle it in a responsible way. Repairs that aren’t covered in the agreement become your responsibility. However, when the car is returned, you don’t get any benefits as such. Moreover, you can’t do any sort of modifications in it such as spoiler or custom paints. If the dog nibbles the seat or if the kid spoils the backseat, you are responsible for all the payments.

Vehicle can’t be claimed as an asset

You can’t claim the vehicle as an asset when you lease it. Technically speaking, it still remains the asset of the dealer from whom you took it.

Opportunity cost and steep car payments

Well, the trend of car payments is slightly different. Some people prefer investing in mutual funds rather than lease. For instance, if you invest $400 in the lease, the amount wouldn’t increase after a period of time. However, if you invest in mutual funds, the amount increases to $800 after some years.

More expensive when you purchase it after lease

If you have taken the decision of purchasing the car after the lease term ends, you need to realize that a high cost will have to be paid, even if the car is financed.

Stuck in it

Once the contract of lease is signed, you will be stuck in it until the expiry of the term. However, some companies allow you to transfer the lease to someone else even in the middle of the contract.

So guys, have you understood the pros and cons involved?

Now, the final decision is yours and you need to carefully consider all the aspects discussed above. If you are confused with anything, seek the help of an experienced person who will provide complete guidance about it. You can even research online to find various options.

About the Author

Alice Methew writer at loves pursuing excellence through writing and has a passion for different sites. Her work has been published on various sites related to Travel, Technology, Business, Management and many more!

Nirmal Anandh M
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Nirmal Anandh
Hi, this is Nirmal Anandh M alias Muthu Vinayagam from the "Temple City", Madurai. I am the Founder of this blog. My profession is, as a CEO in ATHIRA Web Services. It's about Work From Home Jobs, Affiliate Marketing, E-Publishing, Data Conversion and Data Entry Projects. you can connect with me @ Facebook, Twitter, Pinterest , LinkedIn, Flipboard, Medium and Youtube.

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