Buying or renting a car aren’t the only two options for securing good transportation. You can also lease a car. For some folks, this is the single best option they have. They can grab a brand new car for only a small amount of what they would pay if they rented or bought. The interesting thing about leasing a car is that this is one option so many car buyers simply don’t know much about. What is leasing? That’s a great question and one that can be answered here. The many benefits of leasing a car will also be covered here.
When you lease a car, there are certain terms and conditions that you must abide by and that the car dealership will have to abide by as well during the duration of your lease.
What to know when you lease
Payments are based on car’s value
Car’s value in relation to payments: When you lease, your monthly amount due is based on the sale price of the car. If you need to save bucks, make sure you pick a new car with a lower value.
Higher Residual Percent Saves You Money
Monthly payments don’t come out of thin air. They’re based on a residual value percentage and is used to take care of depreciation. If you want lower monthly payments, go for a car with a higher residual percentage.
When you lease, you have a monthly mileage cap. Stick to it. If you exceed the mileage cap, there’s a fee for ever mile over that cap. This can run up into a substantial amount of money if you don’t pay close attention to your mileage.
Here’s another fee that you incur when you lease a car. When you return the car, you’re going to pay something called a disposition fee. It will be between $300 and $500 and is required under almost every circumstance.
What’s the Money Factor?
Compare this to the ARP, and they are the same number. Lowering your Money Factor is one of the most important things to consider while working out the terms of your least. You can save a ton of money if you negotiate this well.
If you want to get a really beautiful car to drive, but just don’t have the money and credit to buy that car, then leasing might be in your best interests. Not everyone wants to settle for a used car that just doesn’t live up to their high standards. When you lease, you can get a beautiful new car to have for awhile without having to worry about the higher standards dealers have when it comes to buying such a car.
When you buy a car, you’re obviously making payments knowing that the car will be yours one day. It’s not the same when you lease. It’s important to understand the distinction between buying and leasing so that you don’t end up committing to something you don’t agree to. Remember these helpful things before leasing a car.
You give up ownership
You’re not going to own the car at any point. You’re simply leasing it. You’re essentially getting a killer deal on a rental car and at the end of the period, you’ll give the car back to the dealership and have no car. If this works for you, leasing saves a ton of money and is much cheaper than renting. The end result is the same, though. When the period is up, you don’t have a car.
Up-front costs are much lower with leasing
Financing a car can truly cost you way more money than you might have to spend. When you lease, there are lower up-front costs to deal with. Seattle car leases often include a no down payment option, which means you drive away in a great car with a set of terms you can live with and only have to pay your first payment and the security deposit. In some cases, there are other fees and taxes to pay for, but the fact remains that you will pay much less money up front when you lease a car instead of buy it.
At the end, you don’t have to sell the car
Since you have a set amount of time to use the car, at the end of that time you’re relieved of your payments and don’t have to worry about selling the car lease to anyone else. You simply take the car back, having lived out your terms of agreement.
What are end payments?
At the end of your payments, you have two options. You can purchase the vehicle and keep it or you can give it back to the company that leased it to you. This simplifies matters for you.