Even though it’s not the best option for everyone, many people find that when they look into leasing a car that it has a lot more advantages than actually buying one. For one thing, it can be a whole lot more affordable. If you look at the purchase price of new cars nowadays, you might be shocked by how much prices have gone up over the years. Now, it can be hard to afford a nice car when you’re on a budget. With leasing, since the monthly payments are typically a whole lot cheaper, you can actually make driving a nice car something affordable.
You won’t just save money on your monthly payments, either. Many drivers find that they are able to save a lot on repairs. For one thing, there is a good chance that you will never find yourself dealing with serious repair issues in the first place, since you will usually turn the car back in before it becomes aged enough that repairs will be a necessity. Plus, since the majority of new leased cars are still under a warranty through the manufacturer, you can rely on the warranty to pay for any repairs that do have to be done.
What Does Leasing a Car Involve?
Even though leasing a car is a pretty straightforward process, there are a few different aspects that you are going to want to know about. Listed below are some of these things. Taking a look at them can help you ensure that you understand everything that you are getting yourself into when you do sign a lease contract.
Your Payments Reflect the Car’s Value
Higher-value cars come with higher monthly loan payments than more affordable cars. If you’re trying to keep your payments to a minimum, you are going to want to look at a car that has a lower sale price.
Higher Residual Percent Saves You Money
Because the car that you lease is going to depreciate in value while you are driving it, you will be charged for this during your lease. This is known as a residual value percent, and the cost will be wrapped up with your monthly payment. If you are trying to minimize what you have to pay each month, you’ll want to find a higher residual percentage.
Understand Your Set Miles
Unlike if you buy a car, you will be given a certain mileage allotment when you lease. Make sure that you are aware of the number of miles that you can drive the car each month without being penalized. Also, be aware that if you are penalized for going over the mileage, it’s generally charged in the form of a per-mile fee. You can check your contract or ask about the cost of this fee before you sign the dotted line.
Expect a Disposition Fee
Even though leasing is an affordable option for many, you do have to be aware of the disposition fee that drivers are typically charged at the time that they take the car back. If you’re budgeting for it, be aware that the cost is usually somewhere in the range of $300 to $500.
Understand What Money Factor Means
Similar to an annual percentage rate, the interest that you are charged during your lease term is called a money factor or lease factor. To save the most money, try to negotiate the lowest lease factor that you can.
Is it Better to Lease or Buy a Car?
Since everyone has different needs and budgets, some people are better off leasing while others are better off buying. Because of its many benefits, however, you may find that leasing is by far the best and most affordable option for you. It’s still important for you to read the contract carefully and to ensure that you understand everything that’s involved before you commit to a lease, however.
You Won’t Own the Car
It is important to understand that with a lease, the car that you will be driving will not actually be yours. You can’t sell it as you would if you owned it. You also can’t mortgage it.
Leasing Cuts Down Up-Front Costs
If you are concerned about the up-front costs that you are going to have to cough up when acquiring a vehicle, you’ll probably be happy to know that you shouldn’t have to come up with nearly as much money if you choose to lease. This is because, even though you’ll usually have to pay a security deposit and perhaps an acquisition fee and other relatively affordably priced rates and taxes, you will not have to pay a down payment. Since this is usually a requirement when buying a car, leasing can be more affordable when you’re talking about up-front costs.
No Need to Worry About Selling Car Leases
In many cases, selling a car — and getting a good price for it — is not as easy as a lot of people think. It’s also imperative for you to keep the car perfectly maintained and to keep records of doing so if you want to be able to sell it. Those who choose to lease do not later have to worry about finding someone who will purchase the car when they no longer want to drive it.
When those who have financed vehicles make their final payments on their loans, they then receive the car’s title and full ownership rights. This isn’t what happens when you make your last lease payment, though. Instead, you’ll need to schedule a time to turn in the vehicle. It will not automatically become yours as a car that was financed for purchase would be. However, if you are thinking about buying the car, you should know that this option will probably be available for you when your lease ends.