Determine If The Lease You’re Considering Is Right For You
If you’re an expert when it comes to leasing cars, you probably don’t have to worry about getting a bad deal. But if you don’t know a lot about car leasing, you might not know what questions to ask the dealer to ensure you’re getting a good one.
While there are many pieces to a lease agreement, there are just a few elements that determine if a lease is good or not. If you ask the right questions, you can more accurately evaluate a lease deal. Here are seven queries that will head you in the right direction.
What Should I Know About Wear And Tear
When you return a car at the end of the lease term you are expected to return it in good condition. If you fail to do so there will be a penalty to pay. Asking ahead of time what counts as fair wear and tear will enable you to be prepared for the end of your contract. Id also recommend asking what the penalties would be. Some wear and tear is inevitable throughout your length of your lease. But you must hand the car back in a safe and roadworthy condition. Its worth noting you must hand the car back with a full-service history and thoroughly cleaned.
How Do I Get The Best Buy When Buying A New Car
First, decide on the size and type of car you want, and then decide what options you want .
Second, find out what the car dealer is paying for the car you’re interested in. This is known as the dealer invoice cost. this is important because the difference between the invoice price and the sticker price is the amount that can be negotiated.
There are two different ways to go about getting this information. The first way is to use an auto pricing service provided by a consumer group or an auto magazine such as Consumer Reports New Car Price Service. This service gives you a complete run-down of the invoice price and the sticker price, adjusted for various options, as well as any rebates or factory incentives. And it tells you how to use the information in negotiating your new car’s price. In addition, using an auto pricing service provides you with the most up-to-date information. The second way is to use pricing guides found on the Internet, such as Edmund’s New Car Prices.
If you have a car to trade-in, you’ll want to find out what it’s worth, too. You can do this by looking up your used car in the N.A.D.A Official Used Car Guide, available online or at the library.
The next step is to begin negotiating with car dealers. Now that you know the invoice price, use that information to bargain for the lowest possible markup over the dealer’s cost.
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What Is The Vehicles Residual Value
For those who arent familiar with the term, the residual value is the value of the car at the end of its lease term. Most car values simply depreciate with time .
Its a good idea to go ahead and do your own research on a certain cars residual value before you come to the dealer. The dealer will only be able to give you a percentage or an approximation of what the residual value should be.
When you lease a car, youre only paying for the portion of it that you use before giving it back, right? Then a car with a lower residual value should have lower monthly rates.
Questions Anyone Leasing A Car Should Ask
Welcome to the wonderful world of care-free car non-ownership or so they say. Leasing a car isnt exactly the piece of cake all those ads would have you believe.
Lease agreements can vary greatly from company to company so it is especially important to both understand the agreements and, of course, shop around for what you need. Also, as with any contract, you definitely need to read the small print.
There are tons of little details which can make leasing a car at best scary, and at worst, an ugly smear on your credit report and bank account. However, dont let that deter you away because here is your simplified guide to leasing a car and coming out on top.1. What does it mean to lease a car?
Basically, a lease is a long-term rental agreement.If you always like to drive a new car, or if you dont want to pay for the depreciation of a new car, a lease may be a good idea.
However, if you drive your cars hard or keep them until they fall apart, think again: leasing is not as simple as a making some payments and giving the car back.
2. Is leasing a car cheaper or advantageous over buying?
Vehicle Leasing is better if you like to get a new car every 2 to 3 years, as it can lower your car payments or give you the opportunity to drive a more expensive car with a payment comparable to a less expensive car i.e. a Lexus on a Toyota budget.
3. What is some of the jargon I should know?
4. What payments are due at the beginning of a lease?
5. What type of lease is it?
What Is The Residual Value Of The Car
Residual value means how much worth the car will be when the lease expires. It is a crucial component and expressed in percentage of the MSRP . Here if the residual value is high the lease monthly payment will be low. In the car leasing program, you pay for the difference between MSRP and residual value across the lease duration. If the residual value is high the difference will be small.
For example, if you lease a car with MSRP $40,000 with 60% residual value across 3 years then at the end of the lease the car will be worth
60% of $40,000 = $24,000
The difference $40,000 $24,000 = $16,000
$16,000 divide by 36 months = $444 is the monthly payment
If the residual value is 50% then the monthly payment will bump up to $555.
Car Leasing Question #: What Is The Lease Mileage
When you lease a car, you receive what is known as a mileage cap. This means you are allowed to travel within a certain mileage range on an annual basis. The mileage limit covers things like wear and tear, so once you return the vehicle to the dealership, they have accumulated enough costs to offset depreciation. You can adjust mileage, and that will often impact price.
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How Often Do I Need To Drive The Car
Ask yourself how often you intend to drive the car and evaluate your driving habits to determine what model would better suit your needs. If you plan to change the vehicle in a couple of years or expect to alter your driving habits, buying a new car may not be the best idea. But if you need a vehicle with the latest technology on the market, leasing is the ideal option because it provides you with access to a top-notch vehicle without requiring upfront payment. But ensure that your lease term length fits your needs and budget.
What Types Of Car Finance Are Available To Me
Once you have decided on the car and that you can afford it, it is then time to look at the different types of car finance on offer.
Our guide here explains the different types of leasing contract in more detail. Basically it all depends on what you will need at the end of the contract.
- With Personal Contract Hire , you rent the vehicle throughout the duration of your contract, and then return the vehicle at the end of the agreement, leaving the finance company to worry about depreciation values and disposal of the car.
- With Personal Contract Purchase , you get the option to purchase the vehicle or return it to the finance company at the end of the agreement.
- With Personal Lease Purchase , you agree from the outset that at the end of the contract, you will purchase the vehicle. It enables you to eventually buy a new car, without having to find the entire amount up front.
It is important that “you understand the implications of each type of car finance before you commit to anything so you dont get caught out later on. There are differences between a lease and a PCP, although the monthly payments may be fairly similar.”
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Why You Should Never Lease A Vehicle
The major drawback of leasing is that you dont acquire any equity in the vehicle. Its a bit like renting an apartment. You make monthly payments but have no ownership claim to the property once the lease expires. In this case, it means you cant sell the car or trade it in to reduce the cost of your next vehicle.
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Car Leasing: The 10 Most Important Questions To Ask Before You Sign On The Dotted Line
So, youve decided to lease a car and youve picked the right model for your needs. All that remains is to sort out the paperwork before you head onto the road.
Yet while you might be in a rush to get your signature on the dotted line so you can get your mitts on your motor, its important to temper your enthusiasm just a little bit so that you can pause and ask some key questions. These questions will make sure you are clear about your lease and will enjoy a trouble free agreement.
It can sometimes be easy to forget to ask these questions in the heat of the moment, so heres our guide to ensure that you wont miss anything:
What Does The Maintenance Cover Include
While the vehicle is under contract, Fuel & Go will cover the costs of all routine work. This includes things such as maintenance, serving, repairs, premium tyres*, breakdown cover, batteries, exhaust and any worn items.
*Fuel & Go uses a Fair Play policy for tyres. This means damaged tyres are replaced within the maintenance budget. If the tyres have been stolen, vandalised, abused or neglected, you will be recharged.
Our maintenance service is also unable to cover any item on the vehicle that has to be replaced due to neglect, damage or abuse. For any tyres or servicing work, please get in touch with our customer service team and will help you find a local supplier.
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Should I Fix A Dent In My Leased Car
As a general rule, dents smaller than a quarter without any paint damage are acceptable. Anything else and the leasing company will charge you for the cost of the repair. Most dents can be fixed quickly and for a low cost, especially when the paint is not damaged.4 août 2020
What Other Fees Does The Car Lease Have
On top of the mileage fees, you should be aware of other fees that may be in the lease. In fact, car leases tend to be full of hidden costs. What are often advertised as car lease deals usually dont include the fees, fees which can add up substantially. You want to read your lease agreement very carefully and be sure to clarify any sticking points with the dealer. Here are some additional fees that you can expect.
The Drive-Off Fees
The drive-off fees are the upfront costs of your lease. This is a combination of the down payment and any additional fees, such as registration fees. When you buy a car, you want to put a lot of money down upfront to offset your monthly payments. But this is NOT the case when it comes to leasing. In fact, you want to put as little money down in the beginning as possible. The way that lease payments are constructed, you do not save a lot of money by paying more upfront. And if your car were to be totaled, theres no guarantee that you would get that money back .
The Wear and Tear Fees
What does the dealer charge you for wear and tear? When you return the car at the end of the lease period, there is some leeway for the condition of the car. A few slight scratches or stains can be expected after a three or four year car lease. But if there is anything that they deem beyond the normal realm of wear and tear, they might charge you a good deal. Ask about their wear and tear policy before you sign on the dotted line.
The Administrative Fee
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What Is The Car’s Residual Value
The residual value is an estimate of how much the vehicle will be worth at the end of a lease. It is a key component of a good lease and is usually expressed as a percentage of the vehicle’s manufacturer’s suggested retail price .
Here’s why the residual value is important: The higher the residual value is, the lower your lease payment will be. When you lease a car, you are paying for the difference between the selling price and the residual amount spread out over the life of the lease. The higher the residual amount, the smaller that difference will be.
For example, if you were to lease a $30,000 car with a 60 percent residual for three years, that vehicle will be worth about $18,000 at the end of the 36-month lease . That means your lease would be based on the $12,000 difference between the $30,000 price and $18,000 residual. Divide that $12,000 by 36 months and you get a $333 monthly payment .
If this same vehicle had a 55 percent residual , your lease would be based on the difference between $30,000 and $16,500, which is $13,500. Divide this $13,500 difference over 36 months, and the base monthly payment bumps up to $375.
If the residual value was 50 percent, the monthly payment would jump to $417. A 45 percent residual would net you a payment of close to $460.
You can always ask dealers for the residual value of the car you are considering. They will probably give you a percentage between about 45 and 60 percent.
Will There Be A Wear
Leasing laws require that you be told whether wear and tear will be assessed when you return the vehicle and, more specifically, what that assessment is based on. At the end of your lease, your car will be examined for exterior damage like scratches, dents and windshield cracks, plus interior damage like stains. Youll be charged for any excessive damage, though you wont have to pay for the inspection itself.
The law also says that wear-and-tear standards must be reasonable. The standards are based on both the number of miles that you drove and any damage done to the vehicle. If you have some superficial damage to your vehicle, it may be worth it to pay for touch-ups before your assessment.
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What Is Included In My Lease Package
You need to know exactly what is and isnt included in your lease package. Running costs of the car such as regular servicing and insurance wont be included as standard. Maintenance packages are available to purchase when you take out your lease which will help you ensure your car is kept in good condition. Many people opt for this as they prefer to pay a fixed monthly fee over sporadic higher bills when servicing and repairs are due.
Can I Lease A Used Car
Most leasing companies offer new cars, but some specialise in used car leases. However, used car leases are for vehicles in good condition, with few miles because leasing providers want to offer only high-quality services. If you want to lease a used car to save on your monthly payments, get in touch with your local dealership to find out if they offer this kind of lease.
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Learn Ten Car Leasing Questions To Ask Your Dealer
If youre wondering what car leasing is or how leasing a vehicle works, youre not alone. Some of us may be unfamiliar with all of the advantages and disadvantages of leasing an automobile. There are, in fact, a plethora of auto leasing options accessible these days.
In general, vehicle leasing is renting a car for a set time. Vehicle leasing is an alternative to traditional auto buying or financing offered by automotive dealerships. It is frequently utilized by corporations when purchasing a company vehicle. In general, leasing is less expensive than buying. Still, various constraints, such as vehicle mileage limits and non-customization agreements, might influence whether buying or leasing a car is preferable.
Lets look at the ten most often asked questions about automobile leasing.