Vehicle Contract and Leasing – The Pros and Cons

If you are considering a new car, you should be aware that there are two main ways to finance it: buying or leasing. A vehicle contract and leasing agreement is an alternative way to finance your car, allowing you to drive the car you want without the financial burden of ownership. However, it is important to understand the pros and cons of vehicle contract and leasing before making a decision.

What is Vehicle Contract and Leasing?

When you lease a car, you are essentially renting it for an extended period, typically three to five years. You pay a monthly amount, but at the end of the lease term, you return the car to the dealership. Alternatively, if you choose a vehicle contract, you agree to purchase the car at a predetermined price at the end of the lease term. This price is usually based on the depreciation of the car over the lease term.

Pros of Vehicle Contract and Leasing

Lower Monthly Payments – Since you are only paying for the car`s depreciation, you will likely pay less monthly than you would with a loan for the entire purchase price.

Newer Car – Leasing a car allows you to get a newer car than you would be able to afford to buy outright. This is because you are only paying for the depreciation during the lease term, and not the entire value of the car.

Warranty Coverage – Most leased cars come with a warranty that covers any mechanical issues that may occur during the lease term. This can save you a significant amount of money on repairs.

Cons of Vehicle Contract and Leasing

Mileage Limits – When you lease a car, you are limited to a specific number of miles per year. If you exceed this limit, you will be charged for each additional mile.

No Equity – When you lease a car, you never own it. This means you have no equity in the car, and if you choose not to buy it at the end of the lease term, you will have nothing to show for your monthly payments.

Fees and Charges – In addition to your monthly payments, you may be required to pay various fees, such as a disposition fee, which covers the dealership`s cost to prepare the car for sale, and any excess wear and tear on the car.


Whether you choose a vehicle contract or leasing, it is important to understand the advantages and disadvantages of each option before making a decision. Your decision ultimately comes down to your personal preference and financial situation. If you want a new car every few years and are looking to save money on monthly payments, leasing may be the best option for you. However, if you want to own a car and build equity, buying may be a better choice. Ultimately, consider your specific needs and budget before making any decision.