Leasing rather than purchasing a car can be an excellent way to get lower payments while driving a more expensive vehicle than you might normally consider. If you’re thinking about it, here are some car leasing strategies and tips to help out.
Before you lease a car, you should understand some of the terms associated with it, including:
- “Upfront fees,” which are the various fees and payments you make to the automobile dealer to get your new lease. These fees may include a security deposit.
- “Lease term,” which is the length of your vehicle’s lease, such as for 24, 36, or 48 months.
- “Gap insurance,” which is a type of insurance that pays the leasing company for the full value of your leased vehicle if it’s stolen or damaged beyond repair.
- “Lease disposition fee” or “termination fee,” which is a fee that may be charged to you by the leasing company when you turn your leased car back in.
- “Mileage allowance” is the number of miles you’re allowed to drive your leased vehicle annually or over the lease’s term. Excess mileage fees are usually charged per mile and can quickly add up.
- “Buyout price.” If you decide you want to buy your vehicle at the lease’s end, you may have the option to purchase it at a predetermined price set by the leasing company.
- Shop thoroughly before leasing. All automakers offer leasing deals, so don’t focus on the first one you find advertised.
- Read advertised leases carefully. Super-low car lease payments may feature high upfront costs, for example, or steep employee discounts you don’t qualify to receive.
- Negotiate your lease payment. Auto dealers can frequently lower monthly lease payments within a range for each customer, depending on their credit rating or leasing credit tier.
Remember, you don’t own a car when leasing, though you’ll have to cover most of the ownership costs attached to it, including auto insurance. Depending on your credit, you may not qualify for the low lease price advertised for the car you want. Still, leasing a car can be a great way to enjoy having a new car every few years, especially if you stay within mileage allowances.