Deciding to go with leasing a car is a great alternative to outright purchasing a vehicle. In many cases, they are not as expensive as paying a monthly car payment. Therefore, auto dealers who work with leases allow people to enjoy a new car without a lot of cost. This aspect of car leasing is important since car prices have been climbing over the last few years. Hence, going with a leasing option gives people the option to drive in their dream car while keeping their budget safely intact.
Car leases usually end before any major repairs or hefty services need to be done to the car, so people who go with leasing a car can expect less time at the mechanic shop during the course of having the car. In the case that a repair or service is needed, most leased cars come with a manufacturer’s warranty, so any thing that needs to be done will be covered.
What is Involved in Leasing a Car?
There are a few aspects involved in leasing a car. Here are some things to consider in planning for a leased car.
Reflect on Payments in Relation to the Car’s Value
The monthly payments being made on the leased car have a lot to do in relation to the price the vehicle is marked for retail sales. In order to save on some money, going for a vehicle that has a lower value might lessen those monthly lease payments.
Remember that Higher Residual Percent is an Ally
With every leased vehicle, there also comes a residual value percent to consider for the sake of the vehicle’s depreciation. It is important to note that this residual value percent plays a large role in determining monthly payments. In order to lower the price of monthly payments, seek out a vehicle that has a higher residual value percentage.
Do Not Forget to Consider Set Mileage
With every lease agreement, there also comes a maximum limit on the number of miles that can be driven in leased vehicles. Normally, this limit is made on a monthly basis. A fee will be charged in instances where mileage maximums have been breached. Therefore, it is important to understand what limitations are placed on the vehicle lease in order to avoid the fee that applies on a per-mile basis.
About that Disposition Fee
In essence, leasing a car is essentially a few steps above renting a vehicle on a monthly basis. Therefore, there is a great chance that a disposition fee will be charged upon the vehicle being returned. This fee is usually a required feature of the lease, and it can cost between $300 and $500. Hence, this fee might come as a surprise to some people if they do not negotiate about it during at the time the lease is originally written.
Consider the Money Factor Involved
In terms of credit cards, money factor would be the same thing as an ARP. In order to have the best leasing rates, negotiating for a lower money factor will be crucial.
Which is Betting, Buying or Leasing a Car?
This question is essential to understand the difference between buying a car and leasing a car. There are a few restrictions that come with leasing the car that could be done on a car that was purchased, but there are some perks of leasing that cannot be combined with buying. Therefore, understanding a few things about leasing a car is a must when trying to make this decision.
The Car is Not Really Owned
When a car is leased, it is not the same thing as being owned. A car that is bought can be used for any length of time, can be driven any distance, and is not restricted to mileage limitations. In the case of a car being leased, it is owned by the lender, so they have control over what can and cannot happen with the vehicle. At the same time, this situation means another lean cannot be made by any other lending authority, including mortgages.
Financial Savings from Up-Front Costs with Leasing a Car
When a car is purchased and then financed, then some sort of down payment is expected to be placed on the transaction before papers are signed. In some cases, a trade can be made in lieu of a down payment. A combination of the two can be made as well. Opting to go for a lease ignores such up-front costs. In most cases, the first month’s payment and a security deposit are the only two things that are needed up front. Extra money can be placed down on the lease as a way to lower monthly payments, but doing such a thing is not a requirement.
Selling Car Leases is Easier than It Seems
When it comes to selling a car that has been purchased, the task can be quite the hassle. Advertising the sale of the car alone is a trying feat because people simply do not want to pay much money for a vehicle. When you lease a car, though, there is no need to worry about dealing with high resale values because, in the end, it is not the job of the person leasing the car. That task falls to the dealership from whom the car is being leased.
When it comes to buying a car, making the final payment is a joyous day because it actually means the car is owned free and clear. The title will be given over, and it means the owner is free to do what they wish with the vehicle. Leases do end in the option to purchase the vehicle, but it does not become owned by the person leasing the car. At the end of the lease, the car has to be given back if it is not being purchased.