Car leasing companies are very good at presenting all of the advantages of leasing a car, but rarely do they highlight the hidden costs and disadvantages that consumers may face if they decide to lease a car. Here are a few facts to consider before leasing a car.
In most cases, a car lease will have mileage limitations on how many miles can be driven by the end of the lease term. These lease limitations are surprisingly stingy and rarely are they realistic for how most Americans drive their cars. Generally, the mileage limitations are in the range of 10,000 to 12,000 per year for the term of the lease. Increasing the mileage limits will usually result in an increase of the monthly payment by a rate of anywhere from 10 to 40 cents per mile. And, should the consumer go over the mileage limits before the end of the lease, they are usually required to pay for that mileage overage before they can be released from the lease requirements.
Insurance requirements are usually pretty steep for leases. Besides liability insurance, a leaser is also usually required to maintain collision and comprehensive coverage with a zero deductible, which can get extremely expensive.
Also, most auto insurance companies will not cover monthly lease payments, taxes or fees should you get in an accident and total the car. In this case, you may be required to have gap insurance to cover the difference between the residual value of the car and the lease amount.
When leasing a car, it is required that regular maintenance be conducted, including oil changes, rotation of tires and more. If the leasing company discovers at the end of the lease that these things have not been completed, and they decide that the result has been excessive wear and tear on the car-beyond regular scratches and dents that happen over the course of several years of the term of the lease-then they can charge you for what they deem as damage to the car.
Also, you are generally required to maintain matching tires for the car and at the time you turn it in, all of the tires should match. If not, then you will be charged for an entire new set of tires.
In most states, sales tax is added to and based on the monthly lease payment. However, in Texas and Illinois, the sales tax is based on the entire value of the car at the beginning of the lease term.
If you discover that you cannot complete the lease because you have lost your job or for some other unforeseen circumstance, you may be faced with an early termination fee. Also, if you find yourself in this circumstance, you may discover that the leasing company may sell the car at auction and then turn around and charge you for the difference between what the car was sold for and the remaining lease amount.