Deciding whether you want to buy or lease a car should only be done when you gather enough information to reach an informed decision. There are a lot of variables that can be taken as pros and cons on both fronts, so it’s important to know what you’re dealing with before you dive into it headfirst. If you’re a complete novice when it comes to leasing a car, here’s what you should know before you get into it.
What does it mean to Lease a Car?
Unlike buying a car and paying off the loan over the course of the next several years in order to own the car in the end, leasing a car practically means renting it long-term. The process to lease a car is simpler than when you choose to buy one, which is a perk to bear in mind. When you choose the car that you want, you have to sign a contract that ensures that you will pay a designated monthly payment, which goes towards the depreciation of the car. This means that you’re paying for the fact you’re using the car, because the more you use it, the lesser market value it has.
The Terminology You Need to Know
Let’s talk about the terminology that will be thrown at you, so you would do well to know what it means. The capitalized cost means how much your desired car costs the moment you decide to lease it, along with the fees that are imposed by the car dealership.
Another expression that you’ll hear a lot is residual value, which is how much the lease company determines that the car you’re getting will be worth after you’ve used it for a couple of years. The monthly payments are actually your way of compensating the difference between the capitalized cost and residual value.
When it comes to additional fees you’ll have to tackle, there will be quite a few of them to deal with at the beginning of your lease such as security deposit, title fees, and a few others. This is common, but be careful, because there are companies that will try to impose more fees than necessary. Do your research to find trustworthy lease partners like Toomey Leasing Group that will help you navigate your way through leasing waters without trying to extort money.
Finally, at the end of the lease, you will also face end-of-contracts charges that vary on what you decide to do next with the vehicle. If you want to return it and get a new one, there’s a disposition fee to cover. If you’ve exceeded the number of miles determined by the contract, you’ll have to pay the mileage fee, or if you’ve damaged or destroyed a certain part of the vehicle, there’s a wear and tear fee coming your way.
The Final Word
If you don’t have the money to buy a car or finance a loan, then lease might be a good option for you. You will be able to get a good car for an affordable monthly payment, though you need to have a stable income and a lifestyle that supports it. You’ll have to pay some attention not to damage the car in any way that is too drastic, and be careful with the mileage limit. Leasing a car is a good idea, as long as you are aware of both pros and cons and you know what you’re getting into.