Buying a new car isn’t in everyone’s future. You need more money up front, more money to make on payments, and a long-term commitment in order to buy a beautiful new car outright or through financing. For most people, leasing is a more realistic option. You’ll get that beautiful brand new car in your driveway for a set amount of time, pay more realistically affordable payments, and have to commit for a shorter amount of time in order to lease.
One of the greatest things about leasing is that you’ll be leasing it during a period of time before any of its warranties have expired. This means that when your leased car breaks down or needs maintenance, you’ll be able to take it to the dealership and get it fixed free of charge. This is one of the most appealing things about leasing.
What Does Leasing a Car in Involve?
Leasing a car is something you definitely want to research before you do it. It’s not the same as buying a new car and simply keeping up with payments. The terms are different. Most importantly, the end result of leasing is much different. Usually you will return a car you’ve leased instead of buying, although in some circumstances you can exercise the option to buy a leased car when the lease expires. What else is different?
Your Payments Reflect the Car’s Value.
The higher priced the car is, the more your payments will be. A Mercedes will inevitably be more money per month to lease than a cheaper car. Keep this in mind if you are on a budget.
Higher Residual Percent Saves You Money.
A high residual percentage will lower the cost of your monthly payments. This number evolves from the car’s depreciation. The longer you use it, the less it will be worth as the lease goes on.
Understand Your Set Miles.
There are additional restrictions on the use of a leased car. If it’s a new car, you simple drive it as much as you want to, knowing that in time you will own the car. There are restrictions on how much you can drive a leased car. You get a set number of miles to use it per month and if you go even a mile over this, you will be paying a fee per mile over the terms. Make sure to check what your set miles are and don’t go over.
Expect a Disposition Fee.
When you return the car to the people you leased it from, you’ll be expected to pay a disposition fee. This ranges from $300 and $500 and will be discussed with you before you commit to the lease. This is something that is required, so there are few exceptions to the disposition fee.
Understand What Money Factor Means.
Money factor is your ARP. To save more money, you’ll need a lower Money Factor. Dealerships will discuss this number with you and make sure you understand it before you buy. If you’re in the game to save some bucks, pay close attention to the Money Factor!
Is it Better to Lease or Buy a Car?
As with most everything in the consumer world, your circumstances determine just what the better deal is. If you have a lot of income, buying a new car might be the best option. If you’re someone who wants a very nice car but fall short on income, leasing may be your only chance to secure a really nice vehicle for any length of time. It’s a great option for people on a budget who demand the best from their cars. You get a nicer car but won’t ever own it. For some, this is a better option than paying less and owning a car they don’t want in the first place. There are differences in buying and leasing. The most important follow.
You Won’t Own the Car
If you want to be a car owner, leasing isn’t the best option. While in some cases you will have the option to buy the car at the end of the lease, in most cases this isn’t a very good option. If your budget doesn’t allow you to buy an expensive new car, you still might have the option to lease it. Keep in mind that in almost all cases, you won’t ever own the car.
Leasing Cuts Down Up-Front Costs
Up-front costs on a car lease are lower than those on a new car. In some cases, you simply make a first payment and pay the deposit on the car. You’ll pay a little bit on fees and taxes, but in general the up-front costs on a lease are extremely cheap. You don’t need a huge down payment on even the nicest of leased cars. This is why it’s such a good option for people who can’t afford to buy a nice car new.
No Need to Worry About Selling Car Leases
When a new car gets old, you have to sell it. You can also sell the title. With a leased car, you fulfill the terms of your lease and then you return the car, either to purchase it or to simply return it. You don’t have to go through the trouble of selling a leased car. This is a relief for a lot of lease customers.
After the last payment on a leased car, you have two options: Buy it or return it. In almost every case, you’ll need to return the car. The great news is that you’ve fulfilled your agreement and now you can lease another car or even purchase the leased car if your circumstances have changed and you have the option to.