Car leasing has become the latest obsession in the modern society. The number of people who appreciate leasing cars has skyrocketed in the past decade. What’s behind the fascination? For starters, car rental involves a less complicated procedure when compared to actual buying. Secondly, more people are embracing it because it’s cheaper than buying a car. Car leasing lovers have realized it is the only way enjoys a new ride without breaking a bank.
What’s more? Those who lease cars do not frequent the mechanic shop because most car leases end without any need for major repairs or services. What if the vehicle needs a necessary repair? Well, all leased vehicles are always under manufacturer’s warranty. For this reason, you will not spend a dime because all the costs are covered.
What Does Leasing a Car Entail?
Many people opt for car leasing without knowing what they are getting into. They sign their papers blindly without knowing what it involves. If you are entertaining the thought of car leasing, then you should understand the following things.
Your Costs Reflects the Value Of The Car
Before you choose a car, it’s imperative to know that your monthly payments depend on the sale price of the vehicle. Therefore, for you to save money, you should choose a car with a lower value.
Higher Residual Value Percentage Saves You Money
Leased cars come with a residual value percentage that is factored into all monthly payments. The residual percentage caters for the car’s depreciation. Therefore, if you want to make low monthly payments, then go a vehicle with a higher residual percentage.
Understand Your Set Miles
Your car lease will only allow you to drive a certain number of miles per month. In case you exceed them, then there are extra charges for that. To ensure that you stay within budget, make sure you understand the number of miles allowed per month and know the applicable fee per mile if surpass them.
Expect a Disposition Fee
Most people think that car leasing is all about the monthly payments. However, you are required to pay disposition fee when you return the vehicle. Therefore, ensure you include the fee in your budget to avoid surprises. The fee normally ranges between $300 and $500.
Know the Meaning of the Money Factor
Take time and understand what money factor entails. Getting the right money factor will determine how much you save. Therefore, take time and go for the money factor that will help you save more.
Is it Better to Lease or Buy a Car?
This is a question that you need to think about first and make an informed decision. Go for the option that compliments your needs and ambitions. In case you are confused, then we are glad you bumped into this page. Zooomr believes that you should completely understand what you’re getting into before you sign any papers.
You Won’t Own the Car
If you buy a car, then you take up full ownership of the vehicle. However, leasing a car simply means you are paying to use a vehicle owned by the lender. You don’t own the vehicle. Therefore, you cannot sell or mortgage it.
Leasing Reduces Up-Front Costs
When purchasing a car, you are expected to make a down payment or trade in with another vehicle. However, no down payments are required when leasing. Additionally, the upfront costs when leasing are relatively low when compared to those made when buying a car. All you need is to provide the first month’s payment along with a security deposit, acquisition fee, and taxes. You can also put in a larger amount upfront to lower your monthly payments.
No Need To Mind About Selling the Car When You Lease
The process involved when selling a car is tiring and complicated. Sometimes you may be discouraged and end up selling the car at throw away price. However, if you decide to lease, then you won’t have to worry about the resale value of the car. Car leasing is less stressful and fun.
End payments when buying a car marks ownership transfer from the seller to you. Leasing is different; even though you have the choice of buying the vehicle when the lease period is over, it is not automatically yours, and you need to give it back unless you go on and purchase it.