by Auto Leasing Made Easy for Newbies
If you need a car but aren’t quite ready to buy one, leasing could be a beneficial alternative for you. Where do you even begin to weigh the pros and cons of buying vs. leasing a vehicle? Let us help you understand the fundamentals of a car lease so you can make an informed decision.
Auto leasing: what is it?
First things first: just what does it mean to “lease” a car? Rentals and purchases of homes are analogous. Although you will still be required to make monthly “rent” payments, you will not be purchasing the car outright, but rather only purchasing the privilege of using it for a designated duration. What makes this choice so appealing to people?
If you’re careful, leasing a car can end up being less expensive than buying a new one. You can drive a finer car than you can afford to buy. Some people lease just to drive a nicer car. It often takes many years to pay off a car loan, and some people just aren’t ready for that kind of commitment. If they lease, they can drive a brand new car every three to four years.
How much does it cost to lease an automobile?
A number of factors determine the average lease price, just as when purchasing a vehicle. Select the vehicle’s year, make, and model before renting. Obviously, the monthly cost of a Jaguar XF will be substantially higher than that of a Kia Soul.
The amount you pay for your lease and the number of miles you drive each month are two factors that can affect the total cost. Compared to renting a car for 24 months and driving 18,000 miles per month, renting a car for 48 months and driving 10,000 miles per month will get you a cheaper cost. If you want to know how much different leasing alternatives will cost in your area, you may look up rental pricing on Edmunds.
What are the requirements for leasing cars?
Leasing terms might be more demanding than financing conditions because the dealership is essentially licensing you to use their car for a number of years. To qualify for a lease, you must have:
High Credit Score (Good to Excellent)
We expect all your credit accounts to be current and your credit rating to be above average. A reduced monthly payment is possible with a higher credit score. If your credit is fair to poor, you will likely need a co-signer to lease.
Evidence of job status
Dealers may request pay stubs covering the past two months, in addition to a credit report as evidence of income.
You need a valid driver’s license and evidence of insurance
For the duration of your lease, most dealers require full coverage insurance. Ensure you have the right coverage by checking with the dealer before visiting the lot.
You should have the following information before renting a car:
Many factors influence the total amount you pay for a car lease, so it’s important to keep them in mind. First, putting more money down on the lease at the beginning will probably get you a better rate from the dealership. You may not get your money back for the money you paid up front if you have an accident within a few weeks or months of purchasing the automobile, your insurance will probably pay the dealership.
Further consideration: if your rental car mileage exceeds the given allowance, you might have to pay more. Remember, we expect you to return the car in pristine condition as a last resort. Any repairs that go beyond what is considered normal wear and tear may end up costing you.
When Should I Buy or Lease an Automobile?
If you prefer getting a new car every few years, consider leasing. The extent to which you can save money by renting rather than financing the vehicle of your choice is a major factor in deciding whether you should buy or lease.
At this point, the importance of finishing your homework becomes paramount. Leasing a used automobile can be an even better option for those trying to save costs; however, it might take some legwork to locate a trustworthy dealer who provides this service.
Before signing a lease, be sure you read the fine print to identify any hidden costs that could end up costing you more than owning the vehicle outright.
Normal Auto Lease Conditions
A 24-, 36-, 48-, or 60-month period is the standard for most vehicle leases. You can expect to spend less per month for a longer time. But what if you need a vehicle for a much shorter stretch of time?
Car rentals for periods shorter than 24 months are certainly doable, but you should expect to pay a premium. This is because the rate of depreciation is one factor that goes into determining your rental rate. The first year after purchase is when a car’s value drops the most, so you’ll have to pay for a significant portion of that loss.
Car Lease Negotiations
Get the best deal on a lease by shopping around and finding a dealer that’s prepared to work with you. The best way to save money is to carefully review each possible lease agreement to identify any potentially expensive fees or extras.
Keep the capitalized cost, also known as the “cap cost,” as low as possible; it’s important for planning. The amount you’ll pay to lease the vehicle is what this word refers to; therefore, it’s important to negotiate it first.
