The plus side of leasing a car enables you to get behind the wheel of a new car without having to find large sums of money to either outright purchase the vehicle or secure a loan. After a certain amount of time (dependant on different companies), you also get to upgrade to a newer model.
The process of leasing is easy: you make a small down payment, followed up with monthly payments for the term of the lease. Once your term expires, you simply return the car.
Despite all of that sounding appealing, there are few drawbacks:
After the lease has expired, you don’t actually own the car. What it comes down to is you in effect rent the car – this means have no equity in the car whatsoever to use towards the purchase of another car. So over a significant period of leasing, you could have covered the cost of buying a new or used car.
It’s also wise to take lease terms into consideration, as they can carry penalties. For example, exceeding the number of miles in your lease or driving the car beyond its recommended output, compromising its performance and appearance, all carry penalties.
But with that said, leasing is more beneficial than buying if you don’t have the funds to buy a car, or you like the idea of riving a new car that’s way out of your purchase price range. As long as you don’t exceed 15,000 miles a year and respect and keep the car in good condition, there’s no reason you couldn’t drive your dream car.
Process and Finance
So once you’ve decided which type of vehicle you require, such as a convertible, sedan or SUV, you need to look into models and their features, such as fuel mileage. A low fuel consumer car full of safety features and low insurance premiums will be far kinder to your wallet.
Just because you like the look of a car doesn’t necessarily mean you’ll get on driving it. You need to have a test drive, paying attention to comfort, braking, steering etc… What looks amazing and sporty may have too much cabin noise from the low profile wheels and the suspension may be a little stiff for handling. You should also ask the salesperson if the vehicle comes with safety features such as ABS (anti-lock braking system) and ESC (electronic stability control) and head protecting side air bags.
Now you know exactly what you are looking for, go online and compare dealers and their lease terms and conditions. Specialist companies such as The Leden Group are a great resource for both tracking down a suitable car and calculating the financial side with their site tools. Just ensure you can comfortably afford the monthly repayments, even if it means compromising on your vehicle.
Just because you’ve found the best deal online doesn’t mean that’s it concerning price. Once you’ve entered the dealership, don’t let the dealer know you plan to lease until after you’ve hit a purchase price. Your monthly payments will be based on the agreed purchase price.
Salespersons being salespersons will probably try and push you towards closing the deal by constantly reminding you of the relatively low amount of your repayments. Stick to your guns and negotiate up from the lowest purchase price they can accept on the vehicle.
When it comes to your monthly payments, the larger sum you lay out on a down payment, the less these payments will be. If you realise you can’t afford it and take the car back early, this will also incur a penalty, just like ending some loans early with banks do.
As previously mentioned but a key tip: over a significant period of time, the cost of leasing can exceed or equal the purchase price of a new or used car.
Never let on to a car dealer that you plan to lease until you’ve negotiated the car’s final purchase price.
Keep your wits about you when dealing with salespeople who focus solely on your monthly payments. Also stay aware when touching on the total price you’ll pay, including your down payment and monthly payments.