Many people find that leasing a car is a better option than purchasing a vehicle. Car rentals are less expensive in the short run as they often require minimal down payment for a new car. Another benefit of leasing instead of buying is maintenance which lessors usually avoid since rental contracts end before major repairs are necessary. Leased vehicles are under factory warranty during the entirety of the agreement, which means that all repairs come free of charge to the borrower.
What Does Leasing a Car in Involve?
Choosing to rent a vehicle is much different than when you opt to buy a car. Here are some of the most important things that you need to understand when preparing to lease:
Your Payments Reflect the Car’s Value
Your monthly payment when leasing is primarily dependent on the vehicle’s sale price and not your creditworthiness. Such is the reason why choosing a car with lower retail value saves more money.
Higher Residual Percent Saves You Money
The residual value percent is an amount that is factored into your monthly payments and used to cover the vehicle’s depreciation. Choosing a higher remaining percentage will give you lower monthly payments.
Understand Your Set Miles
Your leasing agreement contains a specified number of miles that you can drive for the entirety of the contract. Going over the mile limit is cause for the dealer to charge an additional fee based on each mile that extends beyond the set border. You should make sure that you fully understand the mileage allotment in your contract and refrain from extending beyond such bounds.
Expect a Disposition Fee
Returning your leased vehicle comes with a distribution fee that is usually between $300 and $500. The amount that you are charged depends on the dealer’s policies concerning leased cars and is required.
Understand What Money Factor Means
Money Factor in leasing a car is the equivalent of an APR in buying a vehicle. Negotiating for the lowest possible Money Factor will ensure that you are getting the best deal and cheapest monthly payments.
Is It Better to Lease or Buy a Car?
It’s no question that your visiting this site means that you are in the market for a vehicle. Should you, however, go through the arduous process of buying a car or settle with borrowing an auto for the next few years through a leasing plan? Before making your decision, you should thoroughly understand the difference between leasing and buying a car so that you can select the option that best fits your lifestyle. Memphis car leases are perfect for those who choose to borrow instead of buying their next car.
You Won’t Own the Car
Buying a car comes with the many fringe benefits of reselling the vehicle and borrowing against its value to cover unexpected costs. Leasing an auto does not come with such incentives since the lender technically still has ownership of the car. In other words, Memphis car leases equal lower monthly payments and a reduced maintenance bill. Leasing does not mean that you have the right to make modifications and financial decisions concerning the vehicle.
Leasing Cuts Down Up-front Costs
Many opt for leasing instead of buying because of the upfront costs associated with purchasing a car. You are expected to give a significant down payment, which may include a trade-in coupled with cash when you buy a car. Leasing a vehicle, however, only requires payment of the first month’s rental fee along with security deposit, acquisition fee, and taxes. Using extra funds to put down on a leased vehicle lowers your monthly payment and is entirely optional.
No Need to Worry about Selling Car Leases
Several challenges arise when you choose to remarket your used vehicle. Many customers refuse to pay a high price for a car that has been driven for many years, which means that you will not receive reimbursement for the funds that you originally paid. When you lease a vehicle, the burden of reselling the car is placed on the dealer’s shoulders. It is up to the sales people to convince skeptical consumers that buying used is a good option.
Contrary to the purchase of a car, where the final payment signifies your full ownership of the vehicle, the end payment of a lease does not mean the vehicle is automatically your possession. You can choose to buy your borrowed vehicle at the end of your contract, but you should expect to pay the market price plus other associated fees for the car.