Leasing a car, rather than buying, can offer you significant savings. If you have been eying an expensive sports car or luxury vehicle, but lack the funds to justify purchasing it, such a vehicle can be leased for a fraction of the price. Before you put pen to paper, however, you should make sure you understand how leasing works, letting you make the right decision before making a lengthy commitment. Leasing, in essence, involves renting the vehicle for a portion of time. It lets you drive a new vehicle at a discount, without actually owning it.
What Does Leasing a Car in Involve?
It’s essential that you understand how the leasing process works so that you can determine how to have the vehicle you want at a minimal cost. Here are some of the basic things you should understand before leasing a vehicle.
Your Payments Reflect the Car’s Value.
Now, if you are looking to maximize your savings, you should probably invest in a simple coupe rather than a sports car. Your monthly payments will be proportional to the retail price of the vehicle, so leasing a more expensive vehicle means a higher monthly payment.
Higher Residual Percent Saves You Money.
Driving the vehicle depreciates its resale value, a depreciation that the leasing company knows about and adds to your monthly payment. Be aware that this depreciation gets factored into your monthly payment and that additional mileage will cost you, insofar as such mileage negatively affects the resale price of the vehicle.
Understand Your Set Miles.
Since the leasing company wants to minimize the depreciation on the vehicle, they will restrict your usage to a certain number of miles. If you exceed your allowed mileage, the leasing company will charge you a fee for every mile over the limit. Make sure you take your typical monthly mileage into account before signing an expensive contract. If you will be frequently exceeding your mileage limits, you might need to negotiate a different contract.
Expect a Disposition Fee.
Leasing payments per month are about the same as a monthly rental. However, when leasing a vehicle, you will also have to pay a monthly disposition fee to the leasing company when returning their vehicle at the end of your leasing agreement. This fee typically ranges somewhere between payments of $300 and $500, depending on your leasing company and any agreements you might have with them. Make sure you know about these fees.
Understand What Money Factor Means.
Your money factor determines your monthly payments. Before leasing your a vehicle, the leasing company will calculate your money factor based on your APR. Be aware of your money factor before signing a lease agreement.
Is it Better to Lease or Buy a Car?
If you don’t weigh the pros and cons of buying or leasing carefully, you could choose a less than ideal option, costing you money that careful consideration could have saved you. Texas car leases wants to make sure that their customers understand the various choices available and makes an informed decision about the best of all possible options.
You Won’t Own the Car
If you run into financial trouble while leasing a car, the car isn’t yours to do with as you please. You cannot mortgage the vehicle or trade it in for cash, meaning you will have one less asset for dealing with a financial dilemma. Remember that a leased vehicle isn’t your property, but remains the property of the leasing company. This can significantly limit your financial options and restrains your vehicular usage to the confines of certain limitations.
Leasing Cuts Down Up-Front Costs
Leasing a vehicle skips the many costly payments that a retail dealer requires from a customer upfront, including but not limited to down payments or trade-ins. When you lease a vehicle, the leasing company typically only charges you an acquisition fee, some side charges, and a security deposit. However, you can (if so desired) put a down payment up front, as such a down payment can significantly lower your monthly payments: an investment that, if you have the means, can save you money in the long run.
No Need to Worry About Selling Texas Car Leases
If you are leasing a vehicle, you can skip the hassle of worrying about the resale value of the vehicle or finding a buyer when you wish to transition from one vehicle to another. Instead, the resale value becomes the concern of the leasing company, something that they account for in your contract and monthly payments. Avoiding the arduous process of finding buyers interested in your vehicle, you need simply return the vehicle to the leasing agent when the terms of your contract reach their conclusion.
Most leasing companies give customers the option to purchase a leased automobile at the end of their contract, but you don’t automatically receive it. This is the major difference between buying and renting a vehicle. Just as you don’t ever own your apartment after a certain number of payments, you will not own your car when the terms of your contract expire.
Yet even when purchasing a vehicle, the title isn’t yours until you finish paying the bank.