Vehicle Leases Aren't for Everyone

A vehicle lease can offer a low monthly payment on a vehicle that may be several grades above what you might be able to afford if you applied for a car loan or paid cash. It can be a smart option for certain drivers, but leasing comes with conditions and risks to carefully consider before deciding if it’s right for you.

There are several well-known risks behind leasing a vehicle: the extra costs to pay if the vehicle is driven beyond the agreed upon mileage, if damage is done to the vehicle, or it’s turned in with beyond normal wear and tear. There are, however, other risks that potential lessees don’t know about:

To avoid having to pay both the monthly lease rate and major repair costs, make sure you understand your warranty and its limits.

Because of this, it might make sense to make a minimal down payment or avoid making one at all. Instead consider putting that money into an interest-generating account and parsing it out on top of your minimum monthly payments.

Gap coverage will prevent you from having to pay out of pocket for this difference.

In the end, leasing may be a perfectly suitable option for many drivers. It provides a low monthly payment and the option to upgrade and drive a new vehicle every few years. It is important, however, to understand the individual risks that come with each decision.

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