Leasing a car will be the best way for many people to get the reliability and confidence that comes with being able to drive a brand new car. Leasing allows those seeking to acquire a new car far more bang for their buck. Lease payments are typically lower and the acquisition costs are virtually non-existent, compared with purchasing.
Leased cars will typically have minimal to no maintenance costs to the lessor. Even things like tune-ups and oil changes are frequently included in the lease. And leased cars are brand new, so they rarely break down. In the rare case they do, they are always covered under manufacturer warranty.
What Does Leasing a Car in Involve?
Leasing a car is fairly straightforward, but there are still a few things you should know. Below, we list the most important aspects of leasing a car and what you can expect.
Your Payments Reflect the Car’s Value.
Generally speaking, the more expensive a car’s sticker price, the more your monthly lease payments will be. Some of the cheaper, compact cars can be leased for astoundingly low monthly payments.
Higher Residual Percent Saves You Money.
All cars depreciate over the course of their lifetimes. Residual percent is a measure of how much of the car’s value the dealership expects to be retained when the lease expires. Higher residual percents will result in lower monthly payments, all things being equal.
Understand Your Set Miles.
One of the most important things to pay attention to when leasing a vehicle is the maximum number of miles that can be driven per month without incurring additional fees. This is simply a matter of carefully reading the lease agreement. But failure to not the set miles can result in extra charges quickly adding up.
Expect a Disposition Fee.
One of the subtle differences between leasing and renting is the disposition fee. This is a fee of between $300 and $500 that is charged when the lease expires, and you turn the car in to the dealership. It is to cover the costs of readying the car for resale.
Understand What Money Factor Means.
Money factor is just a way that dealerships assess credit risk of people leasing. It is roughly equivalent to APR. The lower the money factor is, the lower your payment will be.
Is it Better to Lease or Buy a Car?
There are many considerations that go into the decision of whether to buy or lease. But ultimately, only the consumer can decide which means of acquiring a new car is best for them.
The most important thing is that the consumer is totally informed on all of the risks, rewards and costs associated with both buying and leasing. Well-informed consumers will make the best decisions for themselves.
You Won’t Own the Car
When you lease, you don’t own the car. This is often perceived as a downside. But it’s not nearly as bad as it may at first seem.
With leasing, you have no risk of defaulting on the bank loan and having the car repossessed, wiping out all of your equity in the process. You also get to simply walk away from the lease when you’re ready to get rid of the car. Besides the disposition fee, the lease termination won’t cost you a dollar more or an hour of your time. This is far from the case when selling your own car.
Leasing Cuts Down Up-Front Costs
One of the biggest upsides to leasing is the huge reduction in upfront costs. These can amount to tens of thousands of dollars, putting cars within reach to people who could never otherwise afford them.
The only up-front fees associated with leasing are prepayment of the first month, a small security deposit and a few taxes and other small fees. This means you can drive off the lot for just a few hundred dollars, in many cases.
No Need to Worry About Selling Car Leases
Many people assume that ownership is automatically better because they get to sell the car and recoup much of the money they have put in when they want to get another vehicle. But for most buyers, this idea is highly misleading.
Dealerships employ highly trained staff, including expert technicians, talented salespeople, and finance experts to ensure that they can give customers what they need. The reason for this is simple enough. Selling cars is a tough business best left to the professionals. With leasing, you don’t have to spend a dollar of your money or an hour of your time when the lease is done.
Finally, when the lease is over, it’s over. There is no additional fuss or worry. You get to walk away clean and find your next car, hassle free.