Consumers shopping for a new car have three options for making a deal. The first option involves a cash payment with no financing involved. The second option is automotive financing, where the consumer puts money down on a new car and finances the rest. The third option is to lease a car, basically renting it for a term and then returning it at the end of the lease.
Few people can afford to pay cash for a car, leaving the other two options as possibilities. While financing can help you to eventually own your car, leasing can help you get a new car every few years and avoid the hassle and expense of major repairs down the line.
Let’s take a look at several smart tips on leasing your next car:
1. Consider your purchase. What type of new vehicle do you want? When leasing, you need to identify the vehicle that is right for you including the make/model, trim level and other amenities. Choose the car you want and outfit it the way you want before moving to the next step. Yes, you should test drive your vehicle too to make sure that it is the right car for you.
2. Select a term. How long do you want to lease your next car? Although it is possible to get out from underneath a lease, you’ll pay transfer costs to a new owner, that is if you can find one. Choose a lease term that suits you, opting for a shorter 24-month lease if you expect your transportation needs will change or a 36-month or longer lease if you expect your needs will remain the same. The longer the lease, the lower the monthly payment… usually.
3. Know your mileage limits. Leasees often get hammered at the end of the lease term because they did not know their mileage and other limitations. Typically, you’ll be able to drive 1,000 miles per month or 39,000 miles for a 39-month lease. Go over that number and you could be charged 20 cents per mile, a payment you’ll need to make at the end of the lease term.
4. Consider wear and tear. When leasing, you need to take care of the usual maintenance unless a maintenance program is included with your lease. Change the oil at regular intervals, rotate tires, replace the air filter and handle other end of lease term matters. If you return the vehicle with obvious signs of wear and tear, expect to accessed a fee for maintenance. You may end up holding a bill for hundreds of dollars in repairs, maintenance and touch ups inside and out.
5. When to buy. Some people contend that there are better times to lease a car than others. Typically, that time can appear during the last four months of the calendar year as manufacturers seek to move older product off of dealer lots to free up space for new models. Still, lease deals can be had throughout the year, therefore keep your eyes peeled for bargains. Also, you can negotiate your lease too, reducing your monthly payment and your down payment or your capitalized cost rate.
When leasing a car, you’ll typically lease through the manufacturer’s financing arm. Negotiate the best deal and if you later decide you don’t want the car, there are services such as Swapalease.com and LeaseTrader.com that can help you get out from underneath a lease. You can also use those services to test leasing, taking over lease payments yourself to find out if a particular car and leasing is right for you.