Auto leasing isn’t right for everyone, especially if you're struggling with bad credit. Though leasing can seem appealing since you're not paying the entire price of the vehicle, it can be more difficult to qualify for. A lower cost each month is one of the many advantages of leasing, which is a big draw in today's world of high-priced cars, trucks, and SUVs.

However many advantages there are, though, there are five big disadvantages of leasing a car, too.

1. You’ll Always Have a Car Payment

Most lease contracts are around two to three years long. Since leasing is like renting a vehicle for 24 to 36 months, you need to search for another vehicle every couple of years and continue having a car payment until you buy something – or choose a vehicle-free lifestyle!

The monthly payments on a car lease are generally lower than financing a brand new car, but long-term, you may not be saving money because you’re always making payments. Always having to worry about a car payment can be considered a big disadvantage to many borrowers.

If you finance a vehicle instead, you have the option to complete your auto loan and own the vehicle completely – which means no car payments until you decide to borrow or lease again!

2. It’s Hard to Get Out of a Lease

Leasing contracts are rather ironclad, and it can be very difficult to get out of one. Until you completely pay off everything you owe (or find someone to take over your lease), you’re stuck with the vehicle until the end of the term.

Ending a lease term early almost always comes with early termination fees (ETFs), and possibly having to pay what you owe in a lump sum to get out of the agreement.

Vehicle financing gives you the ability to sell the car when you’re ready for something else. As long as you pay off your loan amount, either with money from the sale or a combination of sources, you can sell your vehicle at any time without paying extra fees to the lender.

3. Modifications Aren’t Allowed on Leased Vehicles

5 Disadvantages of Leasing a CarDuring an auto lease, modifications can cost you. It’s not that installing modifications on a leased car is more expensive – it's that leasing companies want the vehicle returned in stock condition.

When a leased vehicle is returned at the end of the lease term, it’s usually prepped to be sold as a pre-owned vehicle. For this reason, the leasing company wants the car with its original equipment, and in good condition. Additionally, modifications have the potential to void the manufacturer’s warranty. If you do decide to mod your leased vehicle, it likely means when you return it.

When you finance a car, you can modify it if you’d like without the risk of paying extra fees. Your name is on the financed vehicle’s title, so it’s yours to do with what you wish.

4. There are Mileage Limits: Frequent Drivers Beware

If you drive more than 15,000 miles a year, then leasing may be a disadvantage to your wallet. Leasing companies assign mileage restrictions to leased vehicles to limit the number of miles and wear and tear the car is returned with. This helps to preserve the condition of the vehicle for later resale.

Mileage limits on a lease are typically around 10,000 to 15,000 miles a year. If you drive more than your allotment, it means paying extra mileage fees. There’s usually an option to purchase extra miles at a lower cost upfront if you think you need them. But, it’s more money you need to shell out, and there's typically no refund if you don't use the extra miles.

With auto financing, there aren’t any mileage restrictions. Frequent drivers can rest easy when they own their vehicle or during their auto loan. Of course, excessive mileage can lower your car’s value, but you don’t have to keep track of how much you drive with a loan.

5. Bad Credit Borrowers May Not Have a Chance

It sounds harsh, but if you have poor credit auto leasing may not be an option for you. Most leasing companies have high credit score requirements, making it hard for those with credit challenges to get into a lease.

Additionally, your credit score is the biggest factor in your money factor; a.k.a. leasing interest rate. A poor credit score typically leads to a higher money factor, which leads to a higher monthly payment.

Those with poor credit ratings typically have a better chance of getting into an auto loan, since there are different lenders for varying credit types.

The Advantage of Auto Financing

If you're looking to lease because you need or want a new vehicle every few years, and you have the means to do it, leasing could be for you. However, if your credit score isn't making it easy, auto financing could be the way to go.

When you buy a car through a subprime lender you may still have the chance to qualify for something newer, or a certified pre-owned car. And if your goal isn't to own a vehicle long term, keeping up with your vehicle’s maintenance, limiting your miles, and keeping it clean can help maintain its value and make it easier to sell later on.

Also, financing is typically easier for borrowers with less-than-perfect credit. A good way to repair a poor credit score is by taking on new credit you can handle. If your goal is to lease in the future, but your credit score isn’t up for the job, then a bad credit auto loan could be the way you turn your credit around to increase your odds of getting a lease in the future.