In today’s economic climate, drivers need flexibility when it comes to car ownership. For many, leasing is the best option. Leases allow drivers to make affordable monthly payments instead of risking a large up-front payment to own a car. Retail prices have been climbing and are expected to continue on their upward trend. Leasing makes for a great, affordable way to get on the road.
One major benefit of leasing is that you won’t have to worry about repairing your car if it breaks down. Most leases do not last longer than the manufacturer’s warranty, and if your car needs any kind of work, it will be covered.
What Does Leasing a Car in Involve?
Lease contracts can be confusing and contain a large amount of words and phrases that only apply to the world of cars. We’ve compiled a few things that are good to know about leases and listed them below:
Your Payments Reflect the Car’s Value.
It stands to reason that the more valuable the car is, the higher your monthly payment will be. The car’s retail price is the main factor considered when determining your monthly payment. You can significantly reduce your monthly payment by choosing an affordable car.
Higher Residual Percent Saves You Money.
When you drive any new car off the lot, it immediately loses a significant amount of value. For dealer’s to account for this loss and make their lease contracts feasible, they will add a residual percentage to your monthly payment. Many do not realize that the higher the residual percentage, the lower your monthly payment will be.
Understand Your Set Miles.
Your contract will include a given amount of miles you are allowed to drive each month. This number factors into your monthly payment. If you drive over this limit within any given month, you will be charged for every mile. Don’t forget to determine the average amount of distance you travel every month and keep that figure in mind when you’re negotiating your contract.
Expect a Disposition Fee.
Besides the first and last month of your lease, you won’t have to pay anything besides your monthly fee. But many drivers do not realize that when they return the car, they will need to pay a disposition fee. Most contracts require it, and it generally ranges between $300 and $500.
Understand What Money Factor Means.
One of the strange terms usually included in a leases is the phrase ‘money factor.’ This is just another word for ARP. So you’re going to want to minimize your money factor to ensure a low monthly payment.
Is it Better to Lease or Buy a Car?
Now that you understand some of the basics and nuances of leasing a car, the time has come to decide whether it’s a good option for you. Most Americans need a car for a variety of reasons, whether it’s work, kids, or recreation. Memphis car leases have proven a great option for countless drivers, but Zooomr realizes that you’re going to want to equip yourself with as much knowledge as possible before you make any binding agreements.
You Won’t Own the Car
Many people believe that leasing a car means that you own it, but legally, that is not the case. Buying a car allows you total freedom to do whatever you want with it, but it will also be more expensive. Leasing a car has the specific advantage of making car use more affordable, but it also imposes limits on what you can do with your car. You cannot, for example, sell or mortgage your lease.
Leasing Cuts Down Up-Front Costs
Purchasing a car outright or with a car loan requires some kind of down payment. That is not the case with leases. To drive a lease home, you will only be asked to pay for the first month, a security deposit, an acquisition fee, and a few other taxes and fees. Leasing also allows you the option of making a down payment, which will reduce your monthly cost. But this is just an option, and it is not required.
No Need to Worry About Selling Car Leases
Leasing is great when it comes to acquiring a new car because you will not have to deal with selling your old one. Selling your car can be a huge nightmare. It will require a large amount of your free time and potential service as well. When you lease, you must simply return the car to the dealer at the end of your contract.
If you have purchased a car by financing it, once you make your final payment, you will receive a ‘title’ confirming your ownership of the car, and it will be officially yours. That is not the case with leases. At the end of your lease agreement, however, you will be given the option of buying the car. If you do not decide to do so, you will have to return the car to the dealer.