A car lease may not be as expensive as purchasing a vehicle, but it will still involve spending a significant amount of money, which is why it’s something that you should do only if you’re sure about it. In a nutshell, leasing a car means that you will be paying for the use of a vehicle for a certain period, then returning or buying it when the lease term ends. Before deciding to lease a car, here are vital details that you need to know.
The lease rate will depend on the depreciation value
Depreciation is the decrease in the value of the vehicle. Cars depreciate fast. Most of them decrease in value by 50% in the first three years of their use. This will determine the cost of your lease as you will pay for its depreciation value. Find a car with a lower depreciation value within the lease term, so you will pay less.
Down payment is non-refundable
Leasing a vehicle requires a down payment too. However, the price is not as high as the down payment of a purchased car. Once you decide to get a lease, the down payment will not be refunded, which can be a drawback in case you end up returning the car earlier than expected. Moreover, cancelling the lease before the term expires will also result in fines.
A lower monthly rate is not always equal to a cheaper deal
Leased cars also have lower monthly fees than financed vehicles. Do not be easily persuaded by a lower monthly fee because this is not the only factor to determine if you are getting cheap car lease deals. Compute the total cost that you will pay and make the comparison to see which has the best offer. For example, the monthly fee may be lower, but the total cost may not be if you add up everything including the down payment and other charges.
There is a mileage limit on the leased vehicle
When you own the car, you are not limited in the mileage that you drive. It’s not the same with a leased vehicle as it has a mileage limit per year, which is usually 12,000 to 15,000 miles. Determine how often and far you will drive and if the mileage limit will be enough. You will be charged extra for the miles that you drive over that. You can also buy additional mileage or negotiate the rate.
The lease price is negotiable
The amount that the dealer gives you doesn’t have to be the final price. You can negotiate to get a lower rate. There is nothing wrong with negotiating a lease. The worse that can happen is that you get a no.
You will take care of the repairs after the warranty
Leased cars come with a warranty, which often lasts for three years. This is also why most terms are offered for three years. If the vehicle requires repair or maintenance and it’s under warranty, you don’t have to worry about the cost. However, you’ll have to pay for it once the warranty expires.
Explore your options and make sure that you understand everything in the contract before signing up for it.
To read more on topics like this, check out the finance category.