Advantages and Disadvantages of Car Leasing

By | September 19, 2013

Leasing a car means renting a car for a defined period of time. The person who gives the car for lease is called lessor. The person who takes the car for lease is called lessee. The lessee uses the car for a period of time (between one and five years) based on the agreement.

The lessee will pay the installments periodically or monthly. But the car ownership will belong to the lessor. So the lessor has the right to set certain conditions. For example, a part of the car is damaged the lessee cannot decide to replace it, only the lessor has the right to decide.

In the beginning of the car leasing, there may be a little payment or no need to pay a big amount to the lessor by the lessee. The payment conditions will vary as per the agreement. It is generally small and monthly installments or based on miles. If the lessee exceeds the limitation of the miles mentioned in the agreement, the lessee has to pay as per mile base.

If the car is returned with excessive damage the lessor will charge extra fee to the lessee. At the end of the lease period the lessee will have the option to buy the car with a final settlement.

Read on to know the advantages and disadvantages of car leasing.


  • People who like to change cars every now and then, for them leasing a car is good.
  • Lease costs are less when compared to purchase cost.
  • When the driver gets bored with the old car, he/she can take a brand new car for lease.
  • There is no long term commitment between the lessee and the lessor.
  • Very useful for people who frequently change their job location.
  • If the car leased is new, maintenance and repair issues will not occur.
  • Mostly the car is under the coverage of manufacturer warranty.
  • Gap insurance and waived gap liability will provide the opportunity to no liability to the lessee in case of car theft, which does not cover by the regular insurance.
  • There are no upfront charges in leasing.
  • Lease payments are lower and sometimes lesser than the loan payments.
  • At the end of the leased period, there is an option to buy the leased car.


  • There will be no ownership.
  • If anything in the car is changed, you have to pay fine.
  • Terms and conditions are very restrictive.
  • When more miles are traveled than the agreed charges are substantially high.
  • Generally needs to have maximum insurance coverage.

Considering these points is sensible while deciding to lease a car.