The Dos and Don’ts of Leasing a Car
With car leasing gaining in popularity, many hopeful consumers are reading the fine print before carefully considering the contract details. Like any financial decision, leasing a car is no easy feat. Although the process is straightforward, you must understand the ins and outs of the agreement to ensure a hassle-free lease. Here is a breakdown of what you should and should not do when you lease a car.
Car lease to-do list
Before you get excited by the best lease deals available, consider the following tips:
- Negotiating the purchase price is a must. If you are getting a lease directly from the manufacturer, the rates are probably the lowest. But it does not mean it is not open for negotiation. Yes, a dealer cannot control the factors which affect the car’s residual value, but they are almost always open to negotiating the purchase price indicated in the lease agreement. It does not hurt to take your chance because lowering the purchase price means lower monthly payments too.
- Read the fine print. Some ads on car leases are too good to be true. As a smart shopper, you will check lease deals carefully and read the fine print. Some details to look for are the mileage limit, security deposit, and other additional charges.
- Choose a car with higher resale value. Your monthly lease payment is based on the vehicle’s value depreciation. Therefore, a car that does not depreciate as much is cheaper to lease. What this means for a consumer is that you can afford to lease a luxury vehicle rather than settle for a mass-market car.
Lastly, never skip GAP insurance. This insurance protects you in case you total the car in an accident or in the event it gets stolen. Cars depreciate fastest during the first three years of use, which is when you are leasing it. Having insurance gives you the added peace of mind that if anything happens, you are covered for the cost of the car’s value.
What not to do when leasing a car
Even the best car lease deals have a few caveats. You need to understand that every lease deal may add penalties if you decide to terminate early. If you are leasing a car, make sure that you are committed to following through on the entire term.
Look for a deal that does not include a security deposit. Since you are technically not the owner, you will lose the deposit if anything happens to the vehicle. You also need to comply with the terms of the lease, especially with the mileage limit.
When leasing a car, you also need to ensure that you keep the original appearance and prevent damage to the interior and exterior as best you can. Do not attempt to accessorize or make changes to the original paint job; otherwise, the leasing company will charge you heavily based on the wear and tear.
If you think you can keep to the strict terms of a car lease, there is no reason why you should not consider it. There are many financial benefits to leasing, which is why more consumers are choosing it over buying a car.