When you lease a car there are a number of advantages but there are also a lot of risks that many people are not aware of. Before leasing a car always read the contract and terms and agreements. You may be able to avoid paying extra fees when you are completely aware of and understand the language of the contract. Contact several leasing agents before you sign a contract to see who has the most cost effective terms.
Mileage
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When you drive a leased car it is easy to forget about the mileage limitations. Most leases allow you to drive 12,000 to 15,000 miles per year. Once you exceed the allowable mileage there is a charge for every mile over the limit. This amount can build up fast. If you do a lot of driving the amount you have to pay when the lease is complete can be quite extensive.
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Increased Payments
Auto leasing becomes more expensive in tough economic times. Monthly payments increase. Leases are no longer being subsidized by auto makers. In the past many people would lease automobiles because of the low monthly payments but leasing is not as profitable for dealers as it used to be.
Early Termination
When you sign up for a lease the term could be three or four years. Sometimes things happen that will cause you to break the lease. If this happens you will be responsible for paying a substantial penalty for early termination.
Down Payment
When you sign up for a lease you may be required to pay a down payment. The amount can vary but normally it is in the area of $1,000 to $2,000. Terminating a lease early will mean you lose your down payment. If you have bad credit you may be required to have a larger down payment, which serves as a cushion for the risk that the lessor will incur.
Expenses
Leasing allows you the opportunity to operate an automobile without having to worry about normal maintenance or if the vehicle has some sort of manufacturer recall problems. These are normally covered by the lease agreement. However there are some expenses that you will incur such as insurance, registration and possibly repairs.
Security Deposit
You may be required to pay a security deposit. This is usually refundable. When your lease expires, if there was any type of damage to the car you could lose your security deposit because it will go toward the repair of the automobile. It's your responsibility to make sure the automobile is in the same shape it was when you leased it.