Automobile Lease Pros & Cons


Driving and use restrictions apply to a vehicle lease, so the option is not beneficial for everyone. Leasing penalty fees can prove expensive. A leased vehicle must be returned in good mechanical condition and remain under the contracted mileage allowance.

Consider your various lease options and contract restrictions to determine whether a lease is beneficial.

Automobile Lease


Monthly Payment

Leasing payments often prove cheaper than a comparable finance. Unlike financing, lease payments go toward the vehicle’s depreciation, not its entire cost. Expected depreciation and payment amount is based on the mileage and term you choose.

The predetermined future market value of the vehicle at the end of the term does not affect your payment, even if it is wrong. Because leasing payments are cheaper, you can drive a new vehicle with more features and options for less than it would cost to finance it.



Because depreciation and future market value is figured on your intended mileage, you must remain under the contracted mileage to avoid excess fees. For example, if you choose a 12,000 mile per year lease for 36 months, you must return the vehicle with less than 36,000 miles on the odometer.

Depending on the annual mileage you choose, expect to pay 10 to 18 cents per mile over the mileage allowance. A lease is not beneficial for people who drive more than 18,000 miles per year.


Lease-end Options

Leasing is somewhat flexible, which can prove beneficial. You can end your lease early, although depending on the vehicle’s depreciation and market value, it may not prove worthwhile. At any time, you can purchase the vehicle from the bank.

You can trade it to a dealership toward another purchase. Lease transfer is also an option; most leasing banks allow lessees to transfer a lease to another qualified buyer for the remainder of the term.

If you go over your mileage or want to avoid excess lease-end fees, you can purchase the vehicle at the end of the term for the buyout amount stated in your contract.


Lease Fees

A lessee can incur various fees from the leasing bank after the car is returned, a risk and disadvantage of leasing. Most contracts offer wear-and-tear allowance, which covers slight seat wear, light scratches or dings. Some banks do not offer enough coverage.

If you return your vehicle over mileage, in need of repairs or damaged, expect the leasing bank to bill you. You must pay the final lease bill; otherwise, your debt is reported to the credit bureaus.


Auto Lease FAQ

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