Leasing a vehicle is one of the most economical options for people who need a vehicle. What makes leasing versus buying a car such a great deal for consumers is the ability to enjoy a new vehicle for a fraction of the cost when compared to an outright purchase of a new vehicle. Leasing a new vehicle becomes even more of a deal when you factor in the cost of a new vehicle increasing by 2.3 percent each year.
Most vehicle leases are terminated prior to the vehicle requiring any major services or repairs. This equates to saved time and money for the consumer when they do not have to foot the bill for repair work. Additionally, leased vehicles are covered by the manufacturer’s warranty, so even in the case that the vehicle requires a major repair, all of the associated costs are not footed by the consumer.
What Does Leasing a Car Involve
There are numerous nuances involved with leasing a vehicle. Listed below are a few of the most important factors you should understand if you are planning to lease a vehicle:
1)Your Payments Reflect the Car’s Value
The payments you make on a leased vehicle are based in part on the sale price of the vehicle. A lower sale price of the vehicle results in a lower monthly payment and vice-versa.
2)Higher Residual Percent Saves You Money
A lease payment is based on the current valuation of the vehicle. Over time, the value of the vehicle being leased decreases in value. This decrease in value is called “depreciation”. If you opt for a higher residual percentage, you will wind up with the lowest monthly payments possible.
3)Understand Your Set Mileage
All vehicle leases have a defined amount of miles that you are allocated to drive each month. If you do not use a number of allocated miles allocated during a month, they typically do not carry over into the next month. It is very much a “use it or lose it” situation. If you go beyond your allocated miles during the course of a month, you will be charged a fee for each mile driven over the limit specified in the lease. Make sure you know the fee per mile driven over the allocated limit before entering a lease.
4)Expect a Disposition Fee
The best way to think of a vehicle lease is to view it as a rental property. When you rent an apartment or house, you typically provide a security deposit. At the end of your rental agreement, fees are taken out of the security deposit to cover damages, cleaning, and other items. When you return a leased vehicle, a disposition fee is charged that is typically between 300 USD and 500 USD.
5)Understand What Money Factor Means
Understanding a little bit of math can help consumers squeeze out a better vehicle lease. The term, “money factor” is thrown around in lease agreements quite a bit. When you look at the nuts and bolts of a money factor, you will soon realize it is equivalent to an Annual Percentage Rate [ARP]. An ARP is simply the annual rate charged on borrowed money, also known as an interest rate. A money factor is the same thing and it is in your best interest to ensure that your vehicle lease has the lowest money factor possible to maximize your savings.
Is it Better to Lease or Buy a Car?
The truth is deciding between leasing or purchasing a new vehicle depends on your situation. Before you decide between leasing or purchasing, it is important to understand how both options work so you can make an informed decision. Memphis car leases can be the best option for many consumers. Zooomr cannot emphasize enough that consumers should understand what they are getting into before entering any agreements.
You Won’t Own the Car
When you purchase a vehicle outright, you can do whatever you would like to do with it as you please. It is important to understand that when you lease a vehicle, that the vehicle will be owned by the lender. Memphis car payments allow you to have lower payments than an auto loan, but it also means that you can’t sell the vehicle you are leasing.
Leasing Cuts Down Up-Front Costs
When you purchase a new vehicle and require financing, you are expected to make a down payment or trade-in another vehicle to act as collateral for the loan. When you chose Memphis car leases, there is no down payment necessary. Initiate a lease is similar to renting an apartment. All you need to have is a security deposit, acquisition fee, and the first month’s payment.
No Need to Worry About Selling Car Leases
Selling a used car can be a real problem. Many people will try to undercut your asking price. Additionally, unless you have kept stellar service records on the vehicle you are trying to sell, many potential buyers will walk away. With a lease, you do not have the stress associated with selling a car when you want to upgrade.
When you lease a vehicle, the last payment you make does not end with the customer walking away with the title of the vehicle. Generally speaking, you will have the option to purchase the vehicle once the lease is over.