Car leasing deals began to dry up for auto lessors once car manufacturers began offering more incentives to people buying cars. Some of these incentives included zero percent and low rate financing. However, fortunately for car leasing dealers, leasing is still an attractive option, so much so that fifty percent of luxury cars and twenty percent of vehicles, in general, are still leased. While some find leasing more expensive in the long run than buying, some prefer to lease what they can’t afford to buy and are content with not owning a car. Leasing a car works best for those who use their vehicle for business purposes since all of the expenses involved can be charged to the business.
While going for car leasing deals ensure you keep an eye out for these things:
One, car leasing deals that offer low monthly payments usually require a bigger sum of money upfront. This can prove to be a loss for you if the vehicle is damaged or stolen a few months after leasing it. The leasing company would have insurance on the vehicle and will be reimbursed, but you will lose the initial significant sum you paid. Instead of paying a huge sum upfront, pay a maximum of $2,000 upfront, and put the rest of the money in an interest generating account. You can use this to pay the higher monthly installments that come with a lower initial payment.
Two, leased cars, like any other car, drop in value the moment they are bought. When you go through car leasing deals, look for ones that offer specialty gap insurance coverage in their contracts. Otherwise, should the car get stolen or damaged, the insurance on the vehicle would cover only part of the value and you, as a customer, will have to pay the rest. With a gap insurance, the difference would be covered by the policy.
Three, check the mileage offered on car leasing deals before choosing a car. The reason companies offer low monthly payments is because they have low mileage limits. Contracts generally allow customers to drive about 10,000 to 15,000 miles per year. If a customer exceeds this limit, he will have to pay for every mile exceeded. Have an approximate idea of how much you drive on an average and ensure you do not have to lose money on a car that you do not own. Remember that if you do need a higher mileage, you might have to shell out more in terms of monthly payments.
Four, do your best to not damage the car beyond the normal wear and tear. Usually, a scratch mark on the car that is less than the size of your driver’s license will not be penalized. The term ‘normal wear and tear’ differ from company to company. Ensure you thoroughly discuss, read and understand what the car leasing deal means when it says wear and tear. Otherwise, you might end up paying unnecessarily. If the car is significantly damaged, the company will charge you a bill for these repairs at the full market price when you turn the car in.
Five, try not to lease a car for too long. If you lease one for, say, more than five years, you could end up paying a hefty sum for maintenance on a vehicle that you has to be returned eventually. Do not lease the car for more than its warranty period. If you must lease it for longer, you will have to get an extended warranty at an additional cost. You might also have to pay for new brakes and tires. Overall, if you plan to lease a car for long, you might as well buy one given the costs that will be involved.
When you check for car leasing deals, consider these four factors: The amount you pay initially which includes the down payment and extra fees, the monthly payment amount, the number of months you lease the car, and additional charges you will incur when you turn the car in.
Remember, you can negotiate the price when you lease a car, just like you can when you purchase a car. The lower the cost of the car, the lower the monthly payments. The higher the resale value of the car, the lower it will cost you in the long run. If an auto manufacturer is promoting a specific model, you can get a favorable leasing deal on that car.
It goes without saying that you read and thoroughly understand the fine print before you sign a lease agreement. The law requires capital costs, a rate of interest, fees, taxes, the residual value of the vehicle and the depreciating amount to be specified in the contract. Contracts might also offer an option to purchase the car at the end of the lease period. Look up the terms involved in leasing a car such as capitalization cost, depreciation, security deposit, gap insurance, mileage charge, wear and tear, and sub-vented lease before you choose a particular vehicle for lease.
