Who SHould Lease?

Although you may be attracted to the many benefits of leasing, you should consider the questions below before making a decision. If you answer "yes" to any of the questions, it's a good indicator that leasing may not be right for you. To do otherwise could cause you a great deal of unhappiness and unnecessary financial pain.

Do you think there is a chance you'll want to end your lease early?
Lease contracts are purposely written to discourage, even prevent, early termination. To do so usually means you'll pay termination charges or all remaining payments. Therefore, if you lease, you should have a stable lifestyle and a good job situation to minimize the possibility of needing to terminate early. Wanting or needing to end a lease early is the most common problem people have with leasing.

Are you emotionally attached to the idea of owning your vehicle?
When you lease, you never have ownership, unless you choose to buy at lease-end - which about a third of all leasers do. Leasing is not all that different than buying with a loan, in which case the bank holds the title and you don't own your car until the loan is paid off. It's just that, when buying, you build up equity because of your higher monthly payments and, when leasing you don't.

Do you like paying off your loans and driving your cars until the wheels fall off?
One of the benefits of leasing is that you can drive a new car every two, three, or four years. However, you'll always be making payments. To many people, this is an acceptable tradeoff considering the benefit of always having a new car that is always under warranty. And you still have the option to buy at the end of the lease if you really want to get a respite from those payments.

Do you have a flawed credit rating?
Because leases typically require a smaller down payment and lower monthly payments, you generally must have a better credit rating than would be required for a loan because of the higher risk to the lease provider. If you have a history of making credit payments promptly and don't have an excessive debt load, you're going to be fine. Otherwise, you may have to pay a higher interest rate to lease or, worse, be refused. The leasing company may require a down payment or deposit in cases where credit is a problem, this protects them from the initial depreciation should the lease be terminated early.