Outright purchasing, rather than leasing, a car is far too expensive for many people. Car leases are bounds cheaper than actually buying a car, making for an equal possibility of driving away in a new car at a reduced cost. Leasing is increasingly becoming the most viable option for obtaining a new car, and may just be the only practical option for you.
Car leases often feature short lease terms, often ending prior to the necessitation of paying for and administering time-consuming repairs, a benefit car owners do not have. In addition, leased vehicles are required to be under active manufacturer warranty, in theory offering insurance towards any breakdowns or defects you are not at fault for.
What Does Leasing a Car Involve?
Leasing is not exactly simple and requires lessees to inform themselves of several aspects of leasing to make an informed decision about the value of a lease. Familiarize yourself with the below facts to better interpret good and bad leases.
Your Payments Reflect the Car’s Value
Monthly installments are directly tied to a vehicle’s sales price. The lower price a vehicle can command in dealership markets, the lower the amount of each monthly installment will be. Look for cars with lower retail values to save money on your upcoming car lease.
Higher Residual Percent Saves You Money
Payments for leased cars are calculated with generally complex mathematical formulas, all of which factor in vehicle depreciation in form of a residual value percentage. Unlike most financial indicators, which positively correlate with value – high interest rate, high money paid; low ROI, low money made – high residual percentages result in less money spent towards that car’s lease.
Understand Your Set Miles
Every car lease features a limit of miles that can be traveled per month. Exceeding the upper bound of the mile limit will result in hefty per mile fees being held against you to continue driving the car. Inform yourself of the specific set mile limit information related directly to your car lease agreement in case you go over.
Expect a Disposition Fee
Dealers must return leased vehicles back to original form, where work is covered by a lessee-paid disposition fee. Such fees are standard at most car dealerships, and usually vary between $300 and $500.
Understand What Money Factor Means
Money factor multiplied by 2,400 is equal to APR, or annual percentage rate, which is essentially the same as total interest on principal in one years’ time. Seek out low money factors to have lower monthly payments.
Is it Better to Lease or Buy a Car?
By reading this introductory article on the basics of car leases, you are likely in the beginning stages of searching for a car. Zooomr recommends you pump the breaks on accelerating your car search to first learn the basics of vehicular leasing and what makes a lease offer attractive or unfair. Understanding car lease basics will prevent car dealerships from convincing you to take a bad deal, something that happens often with uninformed parties.
You Won’t Own the Car
Those who purchase cars can modify them however they choose. In essence, those who purchase vehicles are transferred ownership when they hand money, check, or money order to buy it. Those who lease vehicles are actually borrowing from the dealership with certain time and distance limits. Everyone in West Tennessee knows that Nassau county car leases equate to lower payments, but doubles in meaning for lessees are not free to do as they choose with their leased vehicle.
Leasing Cuts Down Up-Front Costs
Those who finance vehicles for purchase are almost always required to offer collateral as a form of security against stealing the vehicle, usually in form of cash down payment. Those who choose to take advantage of attractive Nassau county car leases are subject to paying a small security deposit, taxes, and applicable fees. Those interested in lowering further installments can pay a larger amount initially to reduce future payments, although it’s not necessary.
The last payment on financed vehicles transfer ownership to the lessee. That means the new owner can do whatever he or she wants with that vehicle. Lessees must return their vehicle to the lessor upon conclusion of the lease term, as ownership to the vehicle is retained by the dealership. Lessees are often given an offer to outright purchase the vehicle, usually at a rate lower than market, although they must move forward with a purchase or financing of the vehicle.