Leasing a car can be a good way to get yourself into a vehicle with the latest and greatest technology every few years. It can also make upgrading to a newer vehicle more affordable.
If you’ve run the numbers and determined that leasing makes more sense than taking on car payments that you’re tied to for years, it can be a worthwhile option. That being said, it can turn into an expensive proposition if you fall for some of these common mistakes.
A long-term lease. While a car lease is like a short-term rental, having a lease for more than 60 months negates the advantages of having one since you’re not going to save as much money over that much time. Further, if you get a long lease and turn the car in before the lease ends, you’ll most likely have to pay a penalty.
Rolling over negative equity. If you owe money on your previous car loan, you can sometimes roll it into your car lease payments. Known as rolling over negative equity, this can become expensive. Not only will rolling negative equity over cause your monthly payment on your lease to be higher, it could also cause your debt to increase and possibly spiral out of control. Long story short, if you haven’t paid off your current car loan, think carefully before choosing to lease a new car.
Forgetting annual mileage. Most leases allow a certain amount of mileage each year and over the term of the lease. If you turn the car in with more miles at the end of the lease term, you’ll have to pay a fee for each mile over the mileage limit. To avoid this extra cost, be sure to keep track of the miles you’re driving each month so that you don’t exceed the annual limit.
Updating and accessorizing. With a new car in your hands, you may have your mind set on personalizing it with upgraded rims, pinstripes, etc., but before you shell out a lot of money on a variety of accessories, remember that a leased car isn’t yours. While you may be driving the car on a daily basis, you’ll be returning it to the dealership after a set amount of time, so don’t go overboard with accessories. It’s also important that you spend some time cleaning your leased car before returning it to the dealership when the lease is up.
