Thinking of leasing your next vehicle since the monthly payments would be less? There is more to the cost of leasing a vehicle than just the monthly payments. At the end of your lease you can get hit with charges for any excessive wear and tear as well as going over your mileage allowance. There may also be an administration charge for the dealer to calculate all this for you. And if you need to break your lease agreement due to a change in your finances? There will be a fee for that too.
On top of all these hidden charges is the fact that, from lease to lease, you’re continually paying for the highest depreciation years of a vehicle. You’ll also have no equity built up as you do not own the vehicle.
If you’re concerned about the amount of your monthly payments, consider buying a 2-3 year old car. This will spare you the highest depreciation years, so that at some point your loan won’t be worth more than your car. You’ll still have some warranty and the price, and therefore payments, would be less. With the money saved, you’ll be able to fix any problems after the warranty expires and still come out ahead. Since you own the vehicle, you could also keep it longer. Getting a few more years out of it will save you even more money compared to a new car every three years.
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