For a lot of prospective car buyers, leasing may be the best option. Leasing a vehicle is cheaper than making an outright purchase or paying a bank until you own it. A good leasing deal can save the buyer quite a bit of money.
The typical car lease will end long before major repairs become an issue. This can save you time and money in the long run. Vehicles that are under lease are normally covered by a manufacturer’s warranty. In the event a repair is needed, the full costs should be taken care of.
What Does Leasing a Car in Involve?
There are a few things you should be aware of before leasing a car. Below is a list of things to be mindful of before leasing:
Your Payments Reflect the Car’s Value
Your lease payments are based on the full price of the car you select. The lower the total cost of the car, the less your monthly bill will be. This is something to keep in mind while making your selection.
Higher Residual Percent Saves You Money
A residual percentage is added to each monthly payment based on the car’s value depreciation. Selecting a car with the highest residual percentage will lead to lower payments.
Understand Your Set Miles
Car leases require you to drive within a set number of miles each month. If you go over this limit, there will be an added fee on your payment. Take note of how many miles you typically need to travel per month. Be sure to find out the mile limit on your lease agreement and make sure it works for your specific driving habits.
Expect a Disposition Fee
Upon returning a leased vehicle, you will generally be required to pay a disposition fee. This normally falls between $300.00 to $500.00. This fee is to cover the normal wear put on the vehicle during your lease period.
Understand What Money Factor Means
The money factor is the finance rate for your lease. This may be referred to as an annual interest percentage rate by your leasing agent. It’s always a good idea to shop around until you find a lease deal with the best rate.
Is it Better to Lease or Buy a Car?
You should know the benefits of each option before making your choice. If you’re the type that wants to own a car for a long time, or you put a lot of miles on a car each month, buying may be your best choice. If your commuting each month is average and you like to upgrade to a newer vehicle after a couple of years, then leasing is probably your best option.
You Won’t Own the Car
Purchasing a car means that it is yours to drive and alter however you like. Leasing means that you will never own the car, but your payments will be cheaper each month.
Leasing Cuts Down Up-Front Costs
Leasing cuts out the need to make a down payment or trade in your current vehicle. When you choose to lease a vehicle, you will simply owe the first payment and a deposit. An acquisition fee may also be required, along with some other taxes and fees. A larger deposit can lower your lease payments, but this is not required.
No Need to Worry About Selling Car Leases
Selling your old car can be a hassle. It can take time to find the right buyer. Cars also depreciate in value very quickly. You will need to take good care of your vehicle and keep a maintenance record in order to get the best price for your old car. Leasing negates all of this and allows you to just trade in the leased vehicle for a newer model.
Once you make your last payment with a purchased car, the vehicle will legally be yours. You will receive the title from the bank or loan holder. When you lease, the car will be returned once your agreed-upon lease period is up. Depending on the agreement, you may still have the option to purchase the car. You will usually be able to immediately start leasing a newer vehicle.