9 Car Leasing Pitfalls

When looking into car leasing, you may find that it looks like a very attractive deal.  However, if the terms of the loan are not properly understood, it can also be a problem waiting to happen. Be sure to check specific terms before signing any car lease agreement and look out for a few pitfalls.

1. Car Breaks Down Constantly

The lemon law does not apply for leased vehicles in most states. The lemon law mandates that if a car sold, and habitually breaks down, the seller is required, by law, to replace it.  It is critical to review non-working vehicle terms of the contract with the dealer.

2. You Pay For Repairs

When you lease a car, you are responsible for any repairs on vehicles that lie outside the warrantied items. You also pay for maintenance fees, such as tires, oil change, brakes and bad hoses. Ultimately, you are paying to repair a vehicle that is not, and will never be yours.

3. Sales Tax

Be sure to check recent sales tax situations, especially in states such as Texas and Illinois. The state taxes your monthly payments and sometimes the full value of the car. You should add sales tax to monthly payment amounts.

4. Extra Miles

When you lease a car, you are allotted a certain number of miles each year. If you go over those miles, you are charged up to fifteen cents per mile. Typically, if a driver travels more than 15 thousand miles a year, it is not a good idea to lease.  The extra mileage costs can add up quickly.

5. Tires Must Match

When turning in your leased vehicle at the end of your contract, all the tires must match. If they don’t match you will be charged full price for a complete set of new tires. Many times, consumers replace one or two tires at a time because of flats or problems with the tire itself.  Keep in mind the type of tire required for the vehicle before replacing anything.

6. Contract

A lease contract termination can be very expensive.  Try to stick to the terms of your contract to make the most out of your lease savings.  If you do not think the term will work for you, do not lease, or renegotiate the terms. Take a realistic assessment of your needs and try to include all possibilities before committing yourself to any terms.

7. Insurance

Check with your insurance carrier before you decide to lease. Many insurance companies require both comprehensive and collision coverage.  The insurance costs can be significantly more expensive than a car purchase, and may negate the savings a lease should offer. You should also want to maintain GAP insurance, in case the vehicle is destroyed because the insurance company will cover repairs and not your monthly payments.

8. Moving

Moving with a vehicle that is leased requires new tag, registration fees and sometimes additional sales tax fees are required. Moreover, some contracts do not allow you to leave the state with the leased vehicle so be sure to know the terms of your contract. 

9. Excessive Wear and Tear

When your vehicle is turned in, at the end of it's term,  it will be inspected. If the car appears to have an excessive amount of wear and tear, you will be responsible for all necessary repairs. The dealer will decide what the margin of wear and tear will be, so be careful to determine upfront what the wear and tear fees will be.

As you can see, there are a few things to consider before leasing a car. If you can adhere to the conditions and terms of the contract, leasing can be a good option.

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