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Follow AMCScam. You should always make sure you know what you are and aren't responsible for financially. When your lease ends, you'll return the car and may have to pay additional fees to the dealership or lessor. You may be given the option to purchase your lease or lease another vehicle.
If you return the car with damage beyond what's considered routine wear and tear, according to the Federal Trade Commission , you are financially responsible for these repairs. The above perks might have you revving your engine to sign a lease, but there are some major downsides to keep in mind. Tap the brakes and consider the following:. It's ultimately a personal decision whether to buy or lease a vehicle. If you strongly value driving a new or luxurious car and frequently upgrading to the latest vehicles, leasing could make sense for you.
But if you're content to have one reliable car that you stick with for the long run, purchasing a car could make more sense. It also makes more sense to purchase a car if you want to build equity in your vehicle and have it as an asset. Leasing can cost less in the short run, with a lower down payment and smaller monthly payment, but you don't get the benefits of ownership.
When you own your car, you can later sell it or trade it in to buy another car. If you play it right, you may make enough money selling a car that you don't have to finance the next one or can at least reduce the size of a necessary loan.
Leasing doesn't leave you with any equity in the car and can cost more money in the long run. According to Experian's State of the Automotive Finance Market report, the average credit score of those who lease a new car was as of the second quarter of That's higher than the average credit score of held by those who got new car loans the same quarter. On the plus side, leasing a vehicle can help you build credit. Typically, lessors report your monthly payments to the credit bureaus like they would for an auto loan.
This means if you're responsible with the lease, making your monthly payments on time every time, you can help improve your credit. If you're interested in leasing a car but unsure if your credit score is strong enough to help you qualify, it may be smart to spend a little time working to improve your credit first.
This could mean lowering outstanding debts and credit card balances , paying off charge-offs and past-due accounts, and continuing to pay all of your bills on time. Learn what it takes to achieve a good credit score. The purpose of this question submission tool is to provide general education on credit reporting.
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