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Car leasing explained: 10 reasons to not lease a car

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September 21st 2021 info

For some, car leasing is an attractive proposition. You get a new, often very nice car for a lower up-front price. You pay a deposit and then a series of monthly payments for two to three years, sometimes more.

However, if you’re being offered a swanky new Porsche at a cut-price, it’s too good to be true. While you pay less upfront, over time, you often pay more. Plus, car leasing comes with a series of other issues.

So, is car leasing worth it? Below, we discuss the 10 reasons to not let a car, from financial problems to logistical issues.

What is car leasing?

So, what is car leasing, and why do people opt for it? As mentioned, car leasing involves an up-front deposit followed by a series of monthly payments. However, the leasing contract comes with a few limitations, namely:

  • An agreed mileage limit
  • No maintenance cover
  • Maintenance cover available as an additional cost
  • Responsibility for any damage when returning the car

There are more limitations to car leasing compared to owning your own car. It’s clear from the off that this isn’t your car; you’re just renting the vehicle.

For some, this renting is worth the lower initial price. However, not owning the asset you’re driving can have serious knock-on effects. With leasing, you have none of the benefits of owning an asset, but you still have all the risks.

10 reasons not to lease a car

The mileage limit

As mentioned, the mileage limit can be a cause for concern. Usually, a car leasing contract will limit you to between 10,000 and 15,000 miles. For most drivers, this is fine, but for others, it can quickly become a problem.

If you have a long commute or drive cross-country for business, you can end up being hyper-conscious of your mileage, which can make driving an anxious experience.

Some drivers may like to go on regular staycations or road trips, but if you’re nearing your mileage limit, then these drivers may end up staying home, taking public transport and not driving until their lease contract is over.

Even if you don’t think you’ll drive much, having a mileage limit constrains your sense of freedom and autonomy. You should not be told where, when and how far you can drive, so why would you enter a contract that tells you that?

You still pay maintenance costs

If someone asks: “is car leasing a good option?”, mention the fact that leasing means they don’t own the car but are still responsible for all maintenance and repairs. This is perhaps the biggest black mark against car leasing - you don’t own the asset, but you’re wholly responsible for its health and value.

For family drivers, leasing a car can be a big no-no. Kids often get messy, and if they damage the interior, spill paint on the car or whatever else, you’ll have to pay to get it fixed, just for the car to go back to its owner down the line.

If the vehicle is totalled in an accident, then you’ll still have to pay the rest of your contract, too. There have been nightmare scenarios where people have written off a leased vehicle in the first month or two of owning it, then being locked into a two-year contract.

Of course, you could try to get out of your contract early, but this isn’t straightforward either…

Leaving a contract early means paying big fees

Falling on financial hard times can happen, or maybe you’ll get buyer’s regret. What do you do in these situations? Well, a car salesman may sell you on the lower monthly payments for a leased car, but what they don’t tell you is the cost of early termination fees.

The most expensive – and common – fees include the buyer needing to pay out the rest of their lease in one go. This can be a very high fee, and car leasers have a no-compromise policy when it comes to repayments.

By contrast, you can sell a vehicle you own at any time and use the money from that sale however you wish. Car leasing does not offer the same financial freedom.

Missing payments can impact your credit score

Credit score is important. As most of you will know, having a good credit score is central to many things in life, from getting a car loan to owning a home.

If you miss a car leasing payment, it can seriously impact your credit score. It can be easy to miss lots of payments when car leasing, especially if you’re leasing because of financial difficulties.

It might be better to take out a small car loan or opt for a cheaper used car. These carry less risk and impact, and you can find better support if you hit financial troubles.

You may part with a car you really like

Credit score is important. As most of you will know, having a good credit score is central to many things in life, from getting a car loan to owning a home.

If you miss a car leasing payment, it can seriously impact your credit score. It can be easy to miss lots of payments when car leasing, especially if you’re leasing because of financial difficulties.

It might be better to take out a small car loan or opt for a cheaper used car. These carry less risk and impact, and you can find better support if you hit financial troubles.

Zero leeway for car tuning

Some drivers, especially those who drive performance-focused sports cars, need to have the ability to tune their car.

However, you can’t make such changes to a leased car. Any alterations to the car’s engine will need to be reported, and the car leaser will likely ask you to return the car to its default settings when returning it.

Overall, if you like to tune your cars to get every drop of performance out of them, then we’d recommend avoiding leased options.

Very limited customisation options

Car customisation, much like car tuning, is limited for a leased car. You can’t recolour or customise a leased car; it must be returned to the car owner in the exact same state.

This is a small issue for some drivers, but others love changing a car’s paint job, adding a spoiler or changing their tyres and rims.

You can't sell the car to finance a new one

As we touched on earlier, you can’t sell a leased car. This makes it difficult to finance future car purchases and can result in you being stuck in a car leasing cycle.

Since you don’t have an asset to sell, you can lack the money to finance a better purchase. Car leasing means you’re effectively left with the same money as you started with. This can result in you leasing a car again, again and again.

Car leasing is a slippery slope – if you do choose to lease, ensure there’s a long-term plan for you to purchase a car somewhere down the line.

You pay more interest

Car lease monthly payments may be lower than most car loans, but you end up paying considerably more interest. This returns to the central issue with car leasing: you don’t own the asset.

If you don’t own the asset, then it cannot become collateral. Without collateral, lenders need to charge more interest to cover themselves.

The majority of your monthly payments go towards interest, which is never a good investment.

It eventually costs the same as buying a used car

In the end, the main advantage of car leasing, the main dream they sell at the forecourt, isn’t true: car leasing isn’t cheaper than buying a car.

Sure, it may have a cheaper upfront cost and lower monthly payments, but once you factor in early termination fees, maintenance costs, interest and, most of all, the inability to sell the asset, car buying is better for your wallet.

For example, if you pay 10% more a month for your car loan than a car lease but can sell the car after a few years for a decent price, then you’ve saved money.

As we’ve mentioned, if you’re asking yourself “is car leasing a good idea?”, don’t think for the short-term – cars should be long-term investments.

Make a long-term investment with one of our used cars

Car leasing is short-term thinking. In rare cases, leasing a dream vehicle is a good option. For most drivers, however, choosing to invest in a reliable used car is better.

Used cars mean you get better prices while still owning the asset. The asset may decline in price over time, but at least it’s yours – you can drive it as much as you want and sell it whenever you like.

When you choose a used car from one of our reliable dealers, you’re choosing a long-term investment.

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