Why is car leasing a bad idea?
Despite its increasing popularity, there is still the view that car leasing is a bad idea.
Of course, we understand that for some people, car leasing is a bad idea. We aren’t going to sit here and tell you that car leasing is the best thing since sliced bread and you must do it immediately. Because for some people, it’s not and they shouldn’t.
At OSV, we are completely transparent when it comes to car leasing. And that even means writing an article about the bad things about car leasing.
So, in this article we’ll look at when car leasing is a bad idea, and why it might not be for you.
What is bad about car leasing?
Firstly, let’s look at the disadvantages of car leasing;
You don’t own the vehicle
This is probably the biggest disadvantage of car leasing, and one that will be a deal breaker for some. One of the most common reasons why people are hesitant about car leasing is that, once the contract is up, they will have nothing to show for it.
Unfortunately, there is no way around this. This is simply the way with car leasing. If you really want to own your car, then you should look at something like a hire purchase or personal contract purchase. For more information on these, you can read our article about leasing to own at the end.
You have to keep it in good condition
Not that you’re going to run your car into the ground, but it’s something to consider. You are subject to condition restrictions when you have a lease car. You have to keep it within the BVRLA Fair Wear and Tear Guidelines. If you do not, then you will face extra charges.
So, leasing a car probably isn’t the greatest idea if you are going to be doing a lot of off-road driving.
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Lease contracts can be expensive to get out of
The chances are, you aren’t going to need to get out of your lease contract early. However, in the event that you do, it may be pricey. Lease contracts are designed to be seen to the end, so leasing is a bad idea if you’re planning on moving country.
There are mileage restrictions
When you lease a car you are restricted by how many miles you can do a year and over the course of your contract. You can set the miles but if you go over those then you will face charges. These charges are by the mile, and can be as little as 1.5p per mile to £1 a mile.
If you do a lot of driving, and by a lot we mean over 40,000 miles a year, then leasing probably isn’t the best idea.
There are additional costs
One of the biggest misconceptions about leasing a car is that there are a number of hidden costs. While there are additional costs you have to think about, they’re certainly not hidden. Not as long as you go through a reputable broker, anyway.[vc_single_image image=”43870″ img_size=”article-image”]When you lease a car, you have to have fully comprehensive insurance which will be more expensive than your standard third party. You also have to get it serviced which can be costly. And, of course, if you go over your mileage or damage your car, you will face extra charges, because you have gone outside the scope of your original agreement. But, we’re sure you’re not going to spend that much money on a car and not look after it.
However, these are not hidden. These costs will be made known to you before you sign anything or agree to anything. So, while there are extra costs for you to think about you shouldn’t be put off by people telling you there are ‘hidden costs’. If you go through a reputable broker they will be completely transparent about what you are paying for. For more information on additional costs when leasing a car you can read our article here.
What should I think about before I lease a car?
There are occasions when a customer is unsure as to whether they want to lease or not. In this case, I always recommend that they consider the following;
- Do you want to own the vehicle?
- Are you going to be able to stay within the agreed mileage and keep it in condition in line with the BVRLA Fair Wear and Tear Guide?
- Are you going to be able to see the contract to the end?
- Where are you going to be in 3-5 years?
- A lease contract is much harder to get out of than just selling your car on.
- Where are you going to be in 3-5 years?
Who is car leasing best suited to?
Essentially, car leasing is best suited to those who;
- Do not want to own the car at the end
- Don’t want to have to worry about depreciation or disposal of the vehicle
- Like the thought of driving a new car every few years
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What are the alternatives to car leasing?
Okay, so maybe leasing a car isn’t right for you. You still want a new car, but you don’t want to lease and you don’t want to buy it outright. What do you do?
You should look for a finance agreement. Agreements such as hire purchase allow you to make monthly payments on a new car. At the end of the agreement, you own it outright with nothing left to pay. If you want to know more about hire purchase you can download our guide on hire purchase.
Alternatively, you can look at a contract purchase. This has the option to buy the car at the end. However, you have to pay a final payment called the minimum guaranteed future value payment at the end of the contract before you own the car. For more information on this you can download our contract purchase guide.