Car leases are less expensive than making an outright car purchase, and for this reason they can be an excellent option for a lot of people. Car leasing allows consumers to drive a brand new car at a monthly price that is nowhere near the asking price of the car. This is a budget-friendly way to drive a beautiful car since the retail price of cars is getting higher and higher.
Car leases are typically over before the vehicle will need any major services or repairs, and for this reason you will spend much less time in the mechanic shop with a newer car than with an older car. Manufacturer warranties always cover leased cars as well, so when the car needs repairs you will not have to pay a dime.
What Does Leasing a Car Involve?
There are many various aspects that go into the car leasing process. The following information lists important things to consider if you are looking into leasing a car.
Your Payments Reflect the Car’s Value
The monthly payment depends directly on the lowest selling point for the vehicle. In order to keep costs as low as possible you should look into a car that has a low total price.
Higher Residual Percent Saves You Money
The residual value is a percentage that is worked directly into your payment each month. This money covers the depreciation of the vehicle. If you want a lower monthly payment, you should see if it is possible to get a higher residual percentage.
Understand Your Set Miles
There is a specific number of miles that you will be allowed to drive each month when you lease a car. If you were to drive more miles than what is allotted, a fee will be collected depending on how many miles past the limit you drove. Be sure that you understand exactly how many miles you can drive, and make sure you know what the fee is if the mile limit is passed.
Expect a Disposition Fee
The Disposition Fee is a fee that you have to pay when returning any leased vehicle. This is usually unavoidable, and is generally around $300 to $500. This can be seen as a substitute for mechanical work on a purchased vehicle, but is much less than typical mechanic fees.
Understand What Money Factor Means
The money factor is the ARP in the world of leasing cars. The lower the money factor, the higher the savings for you. Try to negotiate a lower money factor.
Is it Better to Lease or Buy a Car?
It is essential to understand every detail of the lease process and know how that differs from the purchase process. Leases are excellent choices for many people, but it’s important to have all the information before signing papers.
You Won’t Own the Car
Even though you will be leasing a car and will be making monthly payments, it still belongs to the lender. Leasing the car will ensure you’ll have lower car payments, but you are stuck in the sense that you cannot mortgage, sell, or modify the car in any way. Any modification is off-limits, this includes window tinting, stickers, paint – this car is not your vehicle.
Leasing Cuts Down Up-Front Costs
Down payments or trade-in vehicles are typically expected when purchasing and financing a car. Leasing a car will allow you to bypass this up front expense, as there is no down payment required. The first month’s payment will become due as well as an acquisition fee, security deposit, and other minimal fees and taxes. It is true that a down payment can be added to the investment to lower the monthly payment but this is completely optional.
No Need to Worry About Selling Car Leases
It can be extremely challenging to sell a car that you no longer need anymore. Car buying prospects usually aren’t ready to pay high prices for vehicles that have been used. If it does sell at all the buyer needs to be sure to be diligent about maintenance. By leasing a car you can bypass the possibility of ending up with a car that may have a low resale value and eventually having to sell it yourself later on down the road.
The final car payment in a car purchasing process is usually when you would receive the title to the car and you would be free to modify it or do what you’d like with the car. This final payment means that the car is yours and you own it outright. In the case of a lease, you do have the option to buy the car when the lease ends but you are generally expected to return the vehicle.