Leasing is not for everyone, but it can be a great option for a certain car buyer. While some car buyers want to purchase a car, make their payments and own the car at the end, other car owners don’t want the commitment. Financing a car means that you’ll have to spend more money on a new car, and the sticker price for new cars is on the rise too.
Leased cars have some significant benefits over financed vehicles. One of the biggest pluses to leasing a car is that you’ll always have a car that is under warranty. All costs for repairs will be covered during the leasing period. The hardest part of owning a car is the maintenance and repairs you’ll have to make to keep the car in good running condition. That’s removed with a leased car.
What Does Leasing a Car Involve?
There are some vital concerns to take into consideration before leasing a car. You never want to make a decision without all the facts. We’ve included some questions and concerns that come up during the decision to purchase or lease a car. You can always ask questions of the leasing company too.
Your Payments Reflect the Car’s Value
The cost of the car will be divided by the length of the lease. You will have some added fees at the beginning and end of the lease agreement, but overall, the cost of the car will directly influence the price each month. If you can’t afford the car’s monthly lease payment, ask about a car that costs less money.
Higher Residual Percent Saves You Money
You can negotiate lower monthly payments by understanding the residual value percent. It’s the vehicle’s depreciation that is factored into the monthly payments. Ask for a higher percentage to lower your payments on a month-to-month basis.
Understand Your Set Miles
Along with your monthly payment, you’ll be responsible for any miles you go over your lease agreement. The leasing company will have a policy in place for how many miles you’re given, and how much it’ll cost when you exceed those miles. You might be able to negotiate the miles allotted with the company.
Expect a Disposition Fee
Your leasing payments each month are basically a rental fee for using the car. When the vehicle is returned to the leasing company, you’ll be expected to pay a fee, which can be a few hundred dollars. Ask about this fee before taking possession of the car.
Understand What Money Factor Means
Like your ARP, money factor will influence how much money you’ll pay each month. Talk this over with the leasing company when making a decision about the car you want.
Is it Better to Lease or Buy a Car?
When you know the difference between leasing and buying a vehicle, you’ll be able to make a sound decision based on your unique situation. Only you know whether it makes sense to lease or purchase a car based on your life and work circumstances.
You Won’t Own the Car
The leased car will not belong to you. It’s a great advantage when it comes to repairs, but it also means you can’t sell the car if you need money. You’ll have to return it to the leasing company and start a new lease agreement. This will leave you open to the process all over from the beginning, which will mean disposition fees and taxes.
Leasing Cuts Down Up-Front Costs
On the plus side, you don’t have to make a large down payment when leasing. In some cases, you don’t have to make any down payments. You’ll have some fees, security deposit and first month’s payment to make.
No Need to Worry About Selling Car Leases
The car isn’t yours to sell, which means that you’re relieved of the pressure to sell the car when you want to purchase a new one. Instead, you return the car and head to your leasing company for a new one.
At the end of your payments, the car doesn’t belong to you. After making years of car payments, most cars will belong to the person who paid the car. That’s not the case with a lease. The lender will require the car back at the end of the payments.