How to Lease a Car
While it’s not for everyone, there are significant benefits to leasing a car over buying one. Leasing a vehicle can be cheaper on a monthly basis than paying for one in installments, and you can often afford to lease a much nicer car than you could buy outright. However, it’s not always easy to navigate the leasing process if you’re not familiar with it. Use the tips below to make sure you get a good deal on your car lease.
Choosing Your Vehicle
It’s important to do your research before heading to the dealership. Websites like TrueCar or Edmunds can show you what to expect from a lease on a given vehicle, including costs, lease length, and mile limits. Your budget for the vehicle should include the down payment (if there is one), the monthly payment towards lease agreement, and insurance plus periodic maintenance expenses for the vehicle. You’ll also want gap insurance, which covers you in the event your vehicle is stolen or damaged in an accident.
It’s generally best to lease a new vehicle so that you choose a lease period that’s covered by the car’s warranty period and avoid extra maintenance and repair costs.
Mileage Allowance and Lease Length
Make sure to consider the mileage allowance when shopping for a car lease. This number is the maximum number of miles you can drive in the leased vehicle before excess charges — typically 10-15 cents per mile over the allowance — kick in. If a lease has monthly payments that seem too good to be true, it could be because of a particularly small mileage allowance. A typical allowance is between 10,000-15,000 miles per year, but your needs may vary.
The length of the lease can also have a big impact on whether or not it’s a good deal. Most leases last between two and four years, with longer leases generally have lower monthly payments. This can be a boon if you’re willing to put in the extra maintenance effort into the vehicle. Generally speaking, however, the longer a car lease is, the less cost-effective it is compared to buying a car outright.
Ask for lease quotes from multiple companies to get a feel for the market in your area. This will also give you an idea of how much specific dealerships are marking up their leases. Keep in mind that many dealerships list discounts on their websites, including leases. These bargains are often on used cars or specific models the dealership wants off the lot, but be aware that there may be hidden costs buried in the promotional terms.
Review the Lease Contract
As with any deal that seems too good to be true, always read the fine print on your contract. Pay extra attention to lease payment information, wear & tear costs, mileage limits and the lease tenure. You should also be on the look-out for add-ons such as premium maintenance packages, fancy car interior décor, additional insurance policies or pricey alarm systems that may not be worth the cost to you.
Don’t be afraid to refuse a contract or bargain for better terms. Since you will be held personally liable for a signed contract, the onus of checking out the terms of the lease prior to acceptance is on yourself.
Although every leased car undergoes a pre-delivery inspection (PDI) prior to delivery, you should double check the vehicle thoroughly once it’s delivered. Your delivery driver will be able to assist you with every detail of the vehicle, and you’ll be required to sign a delivery note only after careful inspection of the vehicle. Be careful during your inspection, as many leasing companies do not accept complaints after the delivery note is signed.
Leasing a car isn’t always the best option, particularly if you need a car for an extended period of time. If you understand the pros and cons and do your research, however, leasing a car can be a smart financial move that gets you the vehicle you need.