To get around today, you need a car, but they’re expensive. Leasing can be a great alternative to ownership, allowing for cheap monthly payments and a huge amount of benefits perfect for any budget.
One of those benefits is that you won’t have to deal with the hassle of paying for any major repairs or services. Leases terminate before the manufacturer’s warranty, so any damage caused by normal use of your car will be covered by your dealer.
What Does Leasing a Car in Involve?
Lease contracts tend to be long and confusing, and use many unfamiliar phrases. It’s important that you understand what you’re getting into, so we’ve detailed a few of the general items. Keep reading and find out exactly what is involved in leasing a car.
Your Payments Reflect the Car’s Value.
One general source of confusion can be the way in which the dealer calculates your monthly payment. In general, that figure is based on the car’s retail value. The lower the price tag on the car, the lower your monthly payment will be.
Higher Residual Percent Saves You Money.
Another factor of your monthly payment is the residual percent. When you drive your lease off the lot, the car significantly depreciates in value. The dealer accounts for this loss by factoring in a residual percent to your monthly payment. Higher residual percentages will translate into lower monthly payments. Keep that in mind when negotiating your lease.
Understand Your Set Miles.
Every lease contract will also stipulate how far you can drive every month. Just like with your cell phone bill, if you go over the limit, you pay for every minute or mile you log. Make sure to determine how far you drive on average every month, and check that number with the dealer before you sign your lease.
Expect a Disposition Fee.
Another fee that many drivers do not expect is the disposition fee. You will need to pay this when your lease ends and you return the car to the dealer. This fee is generally included in every contract and requires you to pay usually between $300 and $500.
Understand What Money Factor Means.
One strange term often included in contracts is ‘money factor.’ This is just another way of saying ARP. Angle for a lower money factor and save on your monthly payment.
Is it Better to Lease or Buy a Car?
Now that you know a thing or two about leasing a car, you need to decide if leasing is right for you. This decision will require careful calculation, and you’re going to want to learn everything you can about your potential lease. You’ll also want to consider the following realities before you sign. Memphis car leases are great options for most drivers, but Zooomr knows it’s important to understand your lease before you commit.
You Won’t Own the Car
Many do not realize that when you lease a car, you do not actually own it. Buying a car means it’s yours outright, and you can do with it what you please. Leasing offers low, affordable payments but it does not offer the same freedom as owning. If a financial issue arises, you will not be able to sell or mortgage your car.
Leasing Cuts Down Up-Front Costs
One massive benefit of leasing is that your initial payments won’t be much higher than your average monthly payment. Purchasing a car means you need to put down a significant amount of the car’s value before you can drive it off the lot. Memphis car leases will not ask you to do this. To complete your lease, you will just have to pay for one month, a security deposit, an acquisition fee, and a few minor taxes and charges. Memphis car leases also offer you the possibility of lowering your monthly payment by making a down payment that is affordable for you.
No Need to Worry About Selling Car Leases
Another perk of leasing is that you won’t have to eventually sell your car to recover some of what you paid initially. When buying, resale value is a huge factor to keep in mind. When it comes time to sell, it will take up a large amount of your time and energy. Leasing removes this worry. When your lease ends, you will just need to return the car to the dealer.
Because you don’t own a car when you lease it, your end payment will not give you ownership of the car. Many dealers will allow you to negotiate a sale for the vehicle if you decide you would like to hold on to it. If you do not, however, you will be required to return it to the dealer.