A car lease can be beneficial for several reasons. The lease can be less expensive than buying the car outright. A customer may make payments for just several years and not lose the initial equity with a new vehicle purchase. When a customer originally buys a vehicle, they lose value when they drive the car off the lot. This isn’t as true with a lease. That’s because the customer gets to eventually trade the car back in.
A lease offers a vehicle driver the opportunity to drive a higher end car without making longer term payments. A leased vehicle provides a warranty. This means the driver will be able to get any repairs made to the car under the terms of the lease.
What Does Leasing a Car in Involve?
You can lease a car with various components involved. Below are the things to take into consideration when utilizing a leased vehicle:
Your Payments Reflect the Car’s Value.
Your monthly payment will revolve around the total cost of your vehicle. If you are wanting a lower monthly lease payment, consider a vehicle with a lower total vehicle cost.
Higher Residual Percent Saves You Money.
A leased vehicle monthly cost can vary based on the approximate residual value. This means each individual vehicle could depreciate differently. It’s important to understand which vehicle depreciates at a faster clip. You can choose the vehicle that has a higher residual percentage if you are concerned about having a smaller payment per month.
Understand Your Set Miles.
Leased vehicles typically have a set number of miles per year leased. It’s crucial to understand how many miles you are allowed within the time frame of your lease. You could face penalties per mile over the original miles in the contract of the lease. It’s important that you manage your miles each year to keep it under the allotted miles per year in the lease agreement. This could save you a ton of money in the long run.
Expect a Disposition Fee.
You aren’t exactly free of costs when you drop the vehicle off at the end of the lease agreement. You might have to pay a disposition fee. This means you’ll have to pay an extra $300 to $500 to cover costs of the lease. You should always ask about a potential disposition fee when signing a lease agreement with your potential dealer.
Understand What Money Factor Means.
You don’t have to be a rocket scientist to lease a vehicle. You need to know that the money factor is the equivalent of an ARP. You have to always strive for a low money factor when negotiating your lease.
Is it Better to Lease or Buy a Car?
Leasing and buying cars have various positives. A lease can provide you with the opportunity to leave the car behind sooner than later. It can steer you away from mechanical issues that might lie ahead with the car. It can keep you from having to sell the vehicle or possibly trade it in.
If you buy, you might not have to endure a car payment for several years. There are positives to each existing argument. A lease might be the better option because it allows you more flexibility.
You Won’t Own the Car
You will never get to the point where you are not paying for the car. You will turn the car in at the end of the lease. The good news is the payments stop. The bad news is you will have to find another vehicle. You can always purchase the vehicle at the end of the lease. That’s always an option. A lease also offer a fabulous warranty which means you never have to worry about mechanical issues or associated costs.
Leasing Cuts Down Up-Front Costs
A lease will make it easier for you financially. You don’t have to throw down large chunks of money. You don’t have to trade in another vehicle to make it work. You can just provide a first month payment and security deposit. There might also be an acquisition fee plus taxes. Overall, it keeps you from giving up so much in return for your new vehicle. You can also put money down to keep those payment lower on a monthly basis.
No Need to Worry About Selling Car Leases
You don’t have to worry about what to do with a car when you’re ready to move on. Many car drivers face this dilemma. How do you get rid of your current car to get to the next one? A lease provides you with the opportunity just to turn the car back in to the dealer. You aren’t left with a vehicle you have to market on your own. The dealer is very well aware of what it’s worth. If you took good care of it, you have the availability to even purchase it from the dealer.
You won’t face an end payment. This could be a great thing or a bad thing. This means you don’t have three more years to pay the vehicle off. This also means you have to turn the vehicle back in when the lease is up. You can purchase it back from the dealer. You can choose to lease another vehicle and get something new for the same approximate payment. It gives you way more flexibility long term. You have the option to decide at the end of your lease what to do.