There is a heap of confusion out there about car leasing. Myths and misinformation about what it means to lease a car and what you can and can’t do can dissuade a person from going for it when in fact it could be the best option for them.
Is Car Leasing and Car Rental the Same Thing?
Leasing a car is not the same as renting one; this is the source of the biggest confusion. Car rental is ultra-casual with very few requirements to qualify. Rentals can be picked up with a simple cash deposit, no questions asked, kept for as little time as you want, and can be swapped out or returned at any point.
Car rental is usually a short-term endeavor for casual purposes: Lease deals are more professionally acquired and come with more stipulations.
What Are the Five Biggest Myths Surrounding Car Leasing?
1- Leasing a car is more expensive than taking out a loan to buy one.
This is a common misconception and is not necessarily true. If you buy a car and intend to keep it for the next 15 years then yes, entering into a lease deal every few years would end up costing more. However, in the short term, a lease agreement costs roughly half of what a bank loan with interest adds to, meaning if you like to change cars every three or four years, a car leasing agreement could save you money.
There are some additional costs involved with leasing a car, especially if you decide not to buy it when the lease is over, and some car dealerships may try to talk you into a less than beneficial deal, which is why it is important to go through a trusted company focused on providing the best leasing solution for you.
2- Leasing is a way to get around poor credit that won’t allow for a loan.
People may look at leasing as some sort of ‘hack’ if they can’t get approved for a loan but if anything, a lease agreement requires more proof of financial security.
A leasing agent faces higher risk than a bank would, and as such, requires a better credit score and a fixed contract of at least two years. A car is only leased to someone who can prove financial responsibility, even more than a loan would require.
3- If you lease a car, you cannot move to another state or town and take it with you.
Provided you are not fleeing the country, there is no reason you can’t take your leased vehicle if you move address, even to a different state. You do need to inform the company you are leasing from, however, so they know where to send your bills and contact you if needs be. Also, if the tax laws are different in your new state of residence the sales tax rate included in your payment may have to be adjusted accordingly. Failure to do so could leave you in a pretty hairy situation further down the line, so don’t skip town and forget to mention it!
4- Maintenance fees and insurance for your vehicle are paid for by the leasing agent.
This is simply not true, and one of the most common car leasing myths. The reason this miscommunication is so profound is the ongoing confusion between car leasing and car rental.
Think of it like accommodation; if you stay in a hotel room you are ‘renting’ it for the night, therefore the housekeeping, electric bill, and leaking pipe under the sink are not your responsibility or concern. If, however, you are leasing an apartment, you are responsible for paying the bills to the landlord each month and should clean up after yourself.
The thing to keep in mind is that leased cars are brand new and are usually covered by manufacture warranties, which pay for faulty parts, major repairs, etc. Depending on the brand of car you choose, you may also receive free maintenance for a short time, but you are responsible for paying car insurance, the same way you would if you owned the car.
5- When the lease ends and you return the car, you are charged for every tiny bit of damage to the car.
If you lease a car for several years, the chances are the bumper is going to have a scratch or two, the paintwork may suffer the odd chip, and you may even notice a small dent here and there. This is general wear and tear and is expected after driving a vehicle around for a while.
Most leasing companies are understanding of this fact and your initial contract should include a very specific overview of what damage you would be charged for. It is likely to be fairly hefty damage detailed in the contract, something you would probably fix yourself anyway before turning it in.
You should read through the contract closely, so you don’t end up facing any nasty surprises, as unfortunately there are some dishonest businesses out there who try to catch people out.
Car leasing is an excellent solution for people who want a new car but don’t want to or don’t have the means to buy one from a showroom. Second Hand car dealerships or buying from strangers online is not the only other option; car leasing lets you drive the car you want at the quality you want it without committing to the purchase there and then.