Leasing: Benefits and drawbacks

This comparison can help you decide if buying or leasing a car is best for you.

A black sportscar

Benefits and drawbacks of leasing

Potential benefits Potential drawbacks
A new car
Consider leasing if you enjoy having a new car with the latest features every few years — even though you won’t actually own it.
Fees for damage
If you lease, it pays to maintain your vehicle in top condition. You may have to pay the dealer extra for even minor damage.
Lower monthly payments
Monthly lease payments are often lower than loan payments because you’re only paying for the depreciation of the car during your lease — not for the car’s full value.
Excess mileage charges
Your lease agreement will specify how many miles are included. At the end of the lease, you may be charged 15 to 20 cents or more for each mile above this limit. You can usually pay for extra miles ahead of time at a lower rate.
Easy transition
You’ll avoid any trade-in or selling hassles when it’s time for another car.
Fixed term, early termination fee
By signing a lease, you are making a commitment to pay for a certain period of months. Dealers typically charge a high fee if you end the lease early.
No trade-in value
Similar to renting an apartment, leasing a car means that you’re paying to use it. Because you do not own the vehicle, you can’t sell or trade-in the vehicle as a down payment on your next vehicle.

If you plan to buy a car, should it be new or used?

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