Car Leasing Center – Risks of Leasing a Car

car buyoutI know, I know what you’re thinking. First there is a post on the benefits of leasing a car and now here is a post on the risks of leasing a car.

There are benefits to leasing a car and of course there are risks of leasing a car, which you should equally understand before you make the decision between car leasing vs buying. I have seen far too many people who either didn’t understand all there was to know about car leasing vs buying let alone what the risks were. By the time they found out, well it wasn’t too late, but it was costly.

Make sure you are aware of these risks of leasing a car and contemplate these risks as you make the car leasing vs buying decision …

1. Knowledge – now it would seem funny to have this as a risk of leasing a car but it is. From everything that I have seen that has come to my desk as a Leasing Manager, IF the sales rep did their job in explaining leasing and if the customer explained entirely their situation AND asked every possible question that came to their mind, I truly believe the risks of leasing a car wouldn’t be an issue.

Many sales reps do not explain the in’s and out’s of car leasing effectively. Customers don’t quite understand car leasing and then of course are attracted to the payment vs. financing and then that’s where everything comes to a halt. Before you know it you are in the business office signing the paperwork and sail off on your merry way until the time when you have some decisions to make about giving it back or keeping it. That’s when the fun starts and headaches.

KNOW what leasing is all about and make sure you understand fully ALL there is to know before you decide to lease vs buying a car.

2. Ownership – one of the risks of leasing a car is that you are not able to trade it or sell it because you don’t own it. For some people, ownership is an important aspect. They want something tangible at the end of a payment term, something that they can call their own and do with it what they will. Leasing is a liability, whereas financing a car makes it an asset in terms of who owns the vehicle.

3. Mileage – a huge risk of leasing a car is how many kms per year do you drive. I have seen a great many people come to me after their lease it up with 1000s of kms over what they were initially allowed (no kidding!!).

At the time of making the decision to lease over finance, your sales rep SHOULD BE having this talk with you. There are typically two km packages. One is referred to as a low km lease package and it is typically 20,400 kms per year. The other is based on 24,000 kms per year. You can also purchase kms over and above the 24,000 kms as well. First things first however and that is to sit down and think about how many kms you do per year and then work with your sales rep to see if leasing is viable or it is wiser to finance.

4. Damages – another area that costs people a lot of money is damages. You are allowed normal wear and tear (sorry but that scratch the is the length of your car is NOT normal wear and tear). The rule of thumb is typically nothing bigger than a credit card. You can purchase peace of mind insurance where most mfg will offer you the option of an additional insurance which will cover you for up to $3500 worth of damage.

Is this a cash grab? Hmmmm … no. I have seen cars with up to $2500 and over in damages and customers breath a sigh of relief when they remember they had it. Of course have seen other customers kick themselves for not taking it and having to pay for the damages out of their pocket.

These are the risks of leasing a car that you need to be aware of. KNOWLEDGE is the key … and by knowledge I don’t mean the knowledge of the sales rep, I mean your knowledge as well. If you are not sure if leasing if for you or if you want to know the in’s and outs as it relates to your situation, no worries. send me an email and I will be more than happy to help you out and give you some advice before you go into a dealership!

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