Leasing a car rather than buying one outright makes sense for a lot of different reasons. Not only can leasing help keep your monthly payments to a minimum but it also requires less money up front, making it an affordable way to get a vehicle. Typically, leased cars are brand-new. As a result, the manufacturer’s warranty still applies. Because lease terms are usually relatively short, you can continually upgrade to a newer model when your lease expires, helping to ensure that you always have a reliable vehicle. Of course, there are also downsides to leasing. The best way to avoid problems and to get the best deal is by using the following money-saving tips:
- Don’t be afraid to negotiate on the price. Leasing a vehicle isn’t much different than financing a vehicle. You should still try to get the lowest purchase price possible before you agree to the terms of the lease.
- Get the best terms possible. Along with negotiating the price of the vehicle, you should also haggle on how much money you want to put down, how many miles you are allowed, and other details of your lease. You should always try to put down as much money as possible to minimize the amount you have to pay for finance charges.
- Get the lowest money factor possible. The money factor is similar to the annual percentage rate and is used to determine how much money you have to pay in interest each month.
- Invest in Guaranteed Auto Protection (GAP) insurance. This type of insurance can provide financial protection for stolen or damaged vehicles.
- Choose a car that has a low rate of depreciation. Typically, cars that hold their value longer tend to have lower monthly payments. Organizations such as Consumer Reports provide in-depth information on vehicle depreciation for a number of different models. A BMW will depreciate much less than a Vauxhall – so why not check out the latest BMW deals.
- Make sure the warranty doesn’t expire before the lease is up. Having a vehicle that is always under warranty is one of the primary perks of leasing.
- Be sure you understand all of the associated fees at the end of the lease. For instance, you may be charged extra if the car’s tires show excessive wear. All of these potential fees should be clearly outlined in the terms of the lease.
- Consider buying extra miles in advance. Buying extra miles up front is usually more cost-effective than having to pay for any overages at the end of your lease.
- If you are trading in a vehicle, double check to make sure that its value has been deducted from the capitalized cost of the leased vehicle.
- Make sure that the price of the vehicle is fair if you are planning on buying it after the lease expires. Subvented leases, which are designed to keep the monthly payments as low as possible, are quite common. With these leases, the residual value of the vehicle is artificially increased to lower the monthly payments. Unfortunately, that means that the vehicle may not be worth the purchase price when the lease is up. If you are planning on buying the vehicle, negotiate the price down in advance to make sure that the vehicle will be worth at least that much at the end of the lease.
Leasing gives you an opportunity to own a relatively new vehicle without having to deal with a lot of the issues that go along with owning a car outright. To ensure that you get a good deal, however, it is important to thoroughly understand the leasing process ahead of time so that you can negotiate with confidence.