Do you want to lease a car? Maybe you are looking to save money or want to drive a slightly nicer vehicle than you could purchase. If so, leasing can be a great way to make money. Before rushing to the leasing lot and picking up the keys to that sports car, however, you need to know how leasing works. Leasing is basically renting a vehicle. It lets you drive a new vehicle for a slight discount, but it differs tremendously from simply buying a vehicle outright.
What Does Leasing a Car in Involve?
Before putting pen to paper and signing a leasing agreement, make sure you know the kind of deal you are making. Let’s look together at some of the basic things you should know before leasing a vehicle.
Your Payments Reflect the Car’s Value.
Looking to lease a brand new sports car? If you lease an expensive vehicle like a sports car or luxury sedan, you will pay a lot more than if you were driving a simple coupe. Leasing an inexpensive vehicle lowers your monthly bills, helping you pay your other expenses and have some money to save. On the other hand, if you are looking for a flashy new vehicle, you might consider leasing the luxury sports car instead.
Higher Residual Percent Saves You Money.
When you drive the vehicle, the value will graduate decrease with the increased mileage. The leasing company knows this and makes you pay the difference. So be aware that this depreciation gets factored into your payment. Every mile you drive means another degree of damage to the value of the vehicle, which lowers the leasing company’s ability to resell or release the car.
Understand Your Set Miles.
Most leasing companies not only take the depreciation of time on the car into the equation, but keep track of the mileage as well. To make sure that you don’t wear the car out before its time, they will place a restriction on the amount of miles you can use every month. If you exceed this limit, you will pay a fee. Make sure you take this into account before signing any agreement. If you ever think you might be forced to exceed your mile limit, make sure the fee is reasonable.
Expect a Disposition Fee.
While your leasing payments aren’t more than a monthly rental, you will have to pay a disposition fee when you return the vehicle, usually ranging between $300 and $500. Be aware that you might be charged these fees upon returning the vehicle and plan on this expenditure when the lease expires.
Understand What Money Factor Means.
Your APR determines your money factor. Your money factor, in turn, determines your monthly charge. Make sure you take this into consideration so that you can get the best deal possible.
Is it Better to Lease or Buy a Car?
Memphis car leases give their customers options, but also believe that their customers should make the right decision. If I assume correctly that you are clicking this page because you are buying a new vehicle, make sure you know how buying differs from leasing or you could make the wrong financial decision, costing you money.
You Won’t Own the Car
If you buy a car, you can mortgage it or sell it if you encounter an unforeseen financial dilemma or unexpected cost. You cannot do this with a leased vehicle because the vehicle doesn’t belong to you, but to the leasing company. You are only renting the car, so you cannot put it in hock it if you hit hard times. Know that leasing a vehicle somewhat limits your choices about what you can do with the vehicle, as leasing means the vehicle isn’t your property.
Leasing Cuts Down Up-Front Costs
If you lease a vehicle, you manage to avoid a number of costs associated with renting. Leasing simply requires an acquisition fee, security deposit, a few side charges, and of course your monthly payment. You don’t need to put money down or offer a trade in. On the other hand, you can use a down payment to significantly lower your monthly rate. This investment can save you money in the long run.
No Need to Worry About Selling Car Leases
The best thing about leasing is that you never have to worry about the resale value of your vehicle. That’s for the leasing company to worry about. This also means you avoid the arduous process of finding a buyer for your vehicle, which often involves countless ads, phone calls, price negotiations, or going to a dealer who pays you a fraction of the car’s value. If you are simply leasing your car, you just return it to the leasing company when your lease expires.
When you pay your last payment on a new automobile, the title is yours. Before you send this check, the title belongs to the bank or the loan company. Even with a new car, you can’t decide what to do with your vehicle until the title is in your possession. When the lease expires on your leased vehicle, by contrast, instead of receiving your vehicle, you are required to return it. Some leasing companies might let you purchase the automobile instead of returning it, but you will not receive an automobile in payment for all of those monthly checks you have been sending.