For a variety of reasons, many people are well-advised to lease vehicles instead of purchasing them outright. Because car leasing is relatively inexpensive, leasing allows you to enjoy driving a new vehicle without breaking the bank. Since retail prices for new cars are at all-time highs, leasing may well be the most practical way for you to drive your favorite car without blowing up your personal budget.
In most cases, your car lease will come to an end before the vehicle in question needs any major repair work. This can save you from having to deal with many of the expensive, inconvenient repairs associated with car ownership. In all cases, leased vehicles are covered under a warranty. This means that if your leased car does ultimately require a repair, you won’t be out even a penny.
What Does Leasing A Car Involve?
There are several different aspects of car leasing you’ll need to understand before you take the plunge and lease a vehicle yourself.
Your Payments Reflect The Car’s Value
When you lease, your monthly leasing fee isn’t some number picked at random. Instead, this number is directly tied to the car’s original sale value. If you want to minimize your monthly payment, simply pick a less expensive vehicle.
A Higher Residual Percent Saves You Money
To clarify on the last point, your regular payment amount is related to the leased vehicle’s residual value percent (RVP). The RVP is utilized by the leasing party to pay for the inevitable depreciation of the vehicle during the lease period. If you want to get your monthly payment amount relatively low, try to ensure that your RVP is as high as possible. Sometimes, the RVP is called the money factor instead.
Understand Your Set Miles
When you lease a car, you are permitted to drive a specific number of miles each and every month. If your mileage exceeds this preset number, you’ll have to pay a predetermined fee for each mile you drive beyond your limit. Before leasing, make sure that your allotment and overage charge is realistic in light of your personal needs.
Expect A Disposition Fee
Don’t forget that in addition to your monthly fees, you’ll generally need to pay a disposition fee at the end of your lease period. While the size of this fee varies, it typically runs from $300 to $500.
Is It Better To Lease Or Buy A Car?
It’s a given that if you’re reading this, you’re looking to add a car to your life. To determine how you should accomplish this, you need to thoroughly understand all aspects of car leasing and sales. Even if you feel an intense sense of urgency to acquire transportation, you’ll save yourself a lot of trouble if you take a deep breath, relax and do your homework.
You Won’t Own The Car
After you lease your vehicle, you’ll have it at your disposal all day, every day. Nevertheless, leasing is essentially borrowing someone else’s property. When you own, you can change the paint job, install a seat or otherwise change your car on a whim. You can sell your car any time or loan your car out to whomever you want, trusting that ultimately you’ll only have to answer to yourself if something untoward happens. Leasing is a sobering responsibility that allows for less of a freewheeling approach. Though leasing will bring you many of the amenities of car ownership, never forget that you’re borrowing someone else’s car.
Leasing Cuts Down Upfront Costs
For most people, the financial advantages of leasing more than outweigh any potential downsides. When you purchase a new vehicle, you’ll generally need to provide a trade-in vehicle or a substantial down payment. If you decide to lease a car, you avoid having to pay a down panyyment. Typically, you can get into your lease by paying your first monthly payment, a reasonable security deposit and an acquisition fee. Though you might also have to pay a few fees and taxes, these costs are generally modest.
No Need To Worry About Selling Car Leases
Most car owners know that selling a car can involve a lot of frustration and compromise. This process can involve stressful haggling, tiresome paperwork and other complications. If you’re unlucky, you might not find a buyer willing to pay what you need. Leasing a car allows you to bypass all of these issues.
When you make the last payment on your car note, you receive the title free and clear. From that point on, you can essentially do what you want with the car. If you’re leasing, making your final payment doesn’t guarantee you anything. Though you’re often given the option of purchasing the car at this point, this certainly isn’t a given.