Even though it isn’t the right choice for everyone, many drivers find that leasing is a better option for them than actually buying a car. Unfortunately, car prices have been on the rise for the past few years, making it hard for a lot of people to afford the car that they actually want. The good thing about leasing is the fact that the monthly payments are usually a whole lot cheaper, making driving a nice car a lot more budget-friendly.
Another benefit that you might not have thought about is that you can avoid dealing with car repairs if you choose to lease. Since car leases typically involve new cars and since lease terms usually only last for two or three years, you shouldn’t have to worry about the car breaking down on you frequently like you might have to worry about with an older vehicle. Plus, since the car should have warranty coverage, you can expect for the warranty to cover any repair issues that might pop up along the way.
What Does Leasing a Car in Involve?
Before you lease a car, it’s critical for you to understand all of the different aspects that go along with it. These are some of the things that you’ll want to know before signing the contract:
Your Payments Reflect the Car’s Value
The monthly payments on your vehicle will be related to the sale price of the car. If you want to keep your monthly payment amounts low, you’re going to want to choose a car with a lower sale price. If you want a more luxurious vehicle, you can expect for your payments to be a bit higher.
Higher Residual Percent Saves You Money
Since a leased car’s residual value percent is included in your monthly payments, you’re going to want to try to negotiate a higher residual percentage if you want to keep your monthly payments low. The residual value percent is included because it helps cover the cost of depreciation.
Understand Your Set Miles
Your lease will typically include a restriction on the number of miles that you can drive the vehicle each month. If you have a long commute or otherwise put a lot of miles on your vehicles, a lease might not be a good option for you. If you think that you can stick within the allotted mileage, however, you will still want to make sure that you both know the amount of miles that you can drive and that you are aware of the per-mileage fee that you will be charged if you do end up going over the allotted mileage.
Expect a Disposition Fee
When you do return the leased vehicle at the end of the lease term, you are typically going to be charged a disposition fee, so this is something that you are going to want to be prepared for. Typically, this fee usually ranges somewhere between $300 and $500.
Understand What Money Factor Means
The money factor, which is like your ARP, is going to affect your monthly payments as well. If you’re able to get a lower money factor, you’ll enjoy cheaper payments.
Is it Better to Lease or Buy a Car?
You probably came across this page while searching for a vehicle, so chances are good that you either need to buy or lease soon. Different options work out well for different drivers, but a lease is a good option for many. Before you determine if this is something that you want to do, however, you’re going to want to make sure that you are fully aware of everything that is involved in car leasing. Then, you won’t have any regrets later on.
You Won’t Own the Car
When you purchase a vehicle, the car will eventually be yours with a free and clear title after you finish making the monthly payments to pay it off. If you lease, you’re going to be making payments for the use of the car, not toward owning it. The benefit is that you can enjoy lower payments, but you should be aware that you will not have the option of selling or mortgaging the vehicle.
Leasing Cuts Down Up-Front Costs
When applying for a loan to finance a car purchase, you’ll often be expected to put forth a down payment toward the purchase. With a lease, since you aren’t purchasing the car, you do not have to worry about this. Instead, you’ll just have to pay a security deposit on the vehicle and a few assorted fees, including the acquisition fee. You will not be expected to put forth a large sum of money at the beginning of your lease, although you can do this if you’d like to keep your monthly payments to a minimum.
No Need to Worry About Selling Car Leases
When it comes time to sell a car, you might find that it’s more challenging than you realized. It can be tough to find a buyer who will pay what you want for the car, since used car buyers are usually looking for cheaper prices. With a leased vehicle, you will never have to worry about finding a buyer.
When you buy a car and make your final payment, you will be given the vehicle’s title. You can then sell the car or do anything else that you wish with it without worrying about getting anyone’s permission. With a leased car, you cannot sell the vehicle, and you will not own it after making your final lease payment; instead, you’ll be required to return the vehicle. However, you do often have the option to purchase the leased car if you want to after the lease runs out.