guide to lease a car
We present you a step by step guide to lease a car. The procedure may differ to some extent depending on individual and situations. Remember these are just basic steps
Step 1- Understanding Car leasing:
Car Leasing is like renting but for a longer time period. The car is never owned by you, it has to be returned at end of the lease. Popularity of leasing rose in the 1990s as cars became expensive for may to buy. Leasing allows to drive a brand-new car at low monthly payments, thus allowing more people the “new-car experience”. Moreover, leasing may offer tax exemptions for certain occupations.
Advantages of Leasing
1. Leasing requires little or no money upfront and low monthly payments. You can drive a better car for less money
2. You can drive a new car every few years
3. No trade-in hassles at the end of the leas
Step 2- Deciding your lease payments.
Decide how much you can afford to spend on your lease payment. Having a figure in mind before you go shopping makes your shopping focused and saves time.
Step 3- Checking special deals and incentive offers.
A good way to shop for a leased car is to go for car manufacturers lease specials offers as it can save you more money. However, be sure to check on following things, before you decide:
1. Hidden costs, the specials might have hidden costs that are not mentioned in the lease ad.
2. Check if the promised monthly payment includes sales tax and other fees.
3. Does the advertised lease require a large down payment (sometimes called a “cap reduction payment” or “cap cost reduction”), bank fees and a security deposit? What about the annual mileage limit? These are questions you want answered long before you’re closing a lease deal.
Step 4: How to decide on duration of lease?
A car can be leased for two, three, four or five years. However, most people opt for three-year lease. Majority of car manufacturers offer bumper-to-bumper warranties for three-year. Hence, a three years lease keeps you under warranty without paying any extra. Moreover, a car really begins to show its age at about three years. One of the reasons for leasing is to drive a new, or nearly new, vehicle on a constant basis, why to lease for more than three-years and be forced to deal with extended warranty fees and high maintenance costs?
Of course, it’s better to have a low lease payment, and long duration of the lease will drop the monthly cost. However, extending the lease also means you’re investing more and more money into a vehicle that will not be yours. It’s better to find a competitive lease deal and keep the length of the contract to three years.
Step 5: Deciding on which car car to lease.
Find out which car you want or which car suits best as per your needs. This means you know the make, model, trim level, options and color. Flexibility on these parameters (make, model, trim level, options and color) allows you to make a better the lease deal.
For example, a shopper might be very firm about the make, model and trim level, but could accept a variety of options and colors. If another shopper definitely wants hard-to-find options and a specific color, it will be more difficult to negotiate. Why? You have no leverage as a negotiator. You have to pay the dealer’s lease rate or try to locate another identical vehicle.
Step 6: Test driving the vehicle.
When you arrive on the lot for the final test drive take a careful look at the car you are planning to lease. If you specified options – such as side airbags or ABS – check the window sticker to make sure they are on the care.
Step 7: Negotiating a lease payment.
Negotiations can be done in several ways. One way is, contact local dealerships which have the car you need and solicit bids. Take the the lowest bidder, call the others, see if they can beat that price. If not, you’ve lowest price.
The best way to get a good lease payment is to negotiate the lowest selling price for the car (using True Market Value pricing as a guide). Once that is set, you can get the salesperson to draw up a lease payment based on that figure. The thinking was that if the salesperson knew you were leasing, he would focus on the monthly payment while ignoring the negotiated price. He might even try to confuse you with leasing jargon.
However the most important factor is, if you’re happy with the down payment, monthly payment and mileage allowance, the purchase price of the vehicle is probably right. Keep in mind, that you may want to buy the vehicle at the end of the lease, you should also check the “residual value” to make sure it is a realistic figure.
One important point to remember is, most lease cars are based on the owner driving 12,000 miles a year. If you drive farther than this, you are charged from 10 to 15 cents for each mile over the limit. If you think you are going to drive more than the allowed mileage, you may buy extra miles up front. Usually, you can buy extra miles at five cents per mile and have this rolled into your lease payment.
Whichever method you negotiate, get the salesperson to send you a worksheet, detailing all the costs before you go to the dealership. This will allow you to review the figures in a relaxed environment.
Step 9: Paperwork.
Paperwork should be done carefully. At the dealership, you will be presented with a dizzying array of forms to sign, including the lease contract. The dealership might also try to sell you additional items like extended service contracts, fabric protection, alarms. Say, yes if you really need them, however, we recommend turning down these extras.
We recommend you to get a worksheet for the lease deal before hand and read it carefully prior to reaching the dealership to sign the deal. When you have already seen a worksheet for the lease deal you’ve made, the contract should be a formality. Just make sure the numbers are same as worksheet and no additional charges or fees have been inserted. You will also be asked to sign forms to register the new car for you. Ensure that you understand what you are signing and what it means. Don’t hesitate to ask questions if you don’t understand. Car Leasing is a serious commitment and it’s the Dealership’s job to ensure you understand each and every document involved. Take your time, don’t hurry, remember, once you have signed there is no going back.
One last check, ensure your contract includes “gap insurance,” it’s a must have when leasing. In case, your leased car is stolen or totaled in an accident, there can be a gap between what your insurance company will pay you for the loss and the amount you now must pay to the leasing company. If you’ve the gap insurance it will cover you for this loss.
Step 10: Managing your leased vehicle.
Now, as you drive your leased vehicle you must remember that the car should be returned in good condition. Get all the scheduled maintenance done only with authorized service stations. It’s always better not to exceed the mileage limit, hence keep your eye on the odometer.
There are several alternatives when the car approaches to end of lease. You can return the car and lease a new vehicle. You may buy the car for the residual amount as per your contract. In some cases, you may even extend your lease term on a month-to-month basis until you decide what suits you the best.
Take the time to consider each available option carefully and then only take the final decision.
These are just general steps on how to go about a leasing deal. Remember, if you’ve any queries at any point contact our team.
I have been writing articles since last 3 years.
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