Just about every American needs a car for some reason, but buying can be prohibitively expensive. Leasing provides a great and flexible alternative, allowing you to get out on the road with little money down. Leasing a car will prove less expensive than buying and, with retail prices on the rise, more and more drivers are choosing to lease so that they can get where they need to go without breaking the bank.
One advantage of leasing is that you won’t have to deal with any major maintenance or servicing. Leases generally conclude before the manufacturer’s warranty expires, which means you’ll be able to stay on the road and out of the mechanic’s.
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Leasing is a great option for a variety of drivers, but it isn’t for everyone. You’re going to want to make sure you fully understand what’s involved before you sign a contract. We’ve listed some major details below:
Your Payments Reflect the Car’s Value.
Many potential leasers wonder how their monthly payment is calculated. The most important factor is the retail price of the car. The higher the retail, the more you will pay every month.
Higher Residual Percent Saves You Money.
Another aspect of your monthly payment is the residual percent. This is a fee that dealers factor in to account for the decreased value of the car once your contract ends. When negotiating your contract, go for a higher residual percent, and your monthly payment will decrease.
Understand Your Set Miles.
Most leases include a limit on how many miles you can drive in any given month. If you cross this limit, you will be charged for every mile that you drive. As a result, you will want to determine roughly how many miles you expect to drive on a monthly basis. Make sure to go over this with the dealer, make sure it fits your habits, and know how much you will be paying if you go over.
Expect a Disposition Fee.
One additional cost that many drivers do not expect is the disposition fee. This is charged to you when you return your car after your lease has terminated. Most contracts require it, and the sum of the payment usually falls between $300 and $500.
Understand What Money Factor Means.
One confusing term included in many contracts is the phrase ‘money factor.’ This is the same thing as ARP. So, try and angle for a lower money factor, and you’ll save money with your monthly payment.
Is it Better to Lease or Buy a Car?
Know that you know a few of the ins and outs of lease agreements, it’s time to decide whether leasing is right for you. Leasing is a fantastic, flexible option for car use, but it isn’t right for everyone. Zooomr holds that it’s important to understand what you’re getting into before you make any commitments.
You Won’t Own the Car
The first thing you need to understand is that the car is not legally yours. It’s kind of like renting an apartment: you are paying to use it. Leasing allows for an affordable method of using a car, but it also contains a few limitations. As discussed, you won’t be able to drive however much you want every month. You also won’t be able to sell your lease or mortgage the car if the need arises.
Leasing Cuts Down Up-Front Costs
When it comes to purchasing a car, you’ll need to make a significant down payment in order to finance it. Leases do not require you to do this. When you show up to the dealership to sign your lease, you will need to pay for the first month, an acquisition fee, a security deposit, and a few other fees and taxes, that’s it. Memphis car leases also offer the option to make a down payment if you are in a position to do so. This will lower your monthly payment, and many choose this option, but it is not required.
No Need to Worry About Selling Car Leases
Leasing is generally much easier and less time consuming than owning a car. For example, when your lease terminates, you will not have to sell your car to recover some of the amount you paid for it. Selling a car can be a stressful, and time-consuming experience. But by leasing, you just need to return it to your dealer, it’s that simple.
When your lease does terminate, you do not necessarily have to return it to the dealer. Most will offer you the option of buying it for a reduced price adjusted based the vehicle’s depreciation. Unlike with purchasing a car, you will not make an end payment and, in return, receive a title to your vehicle. When your lease finishes, you will be expected to return it to the dealer or negotiate its sale.
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