How To Lease A New Car

Leasing a car involves renting it for an extended period of time from someone else. You pay your money upfront, and the car is yours for the agreed upon length.

When it comes to lease agreements for the car, there are usually two types you can go for.

Closed-End Agreement

The first is a closed-end agreement, in which you simply return the car back to the dealer at the end of your lease.

Open-End Agreement

The second option is the open-end lease, which gives you the option to buy the car at the end of your lease for its current value (or a value that was estimated beforehand when you signed the lease).

In the later case, if you find that the estimated cost given by the dealer is lower than what the car actually costs at the end of your lease, then it may be worth buying since you can get it at price below its market value.

Should You Lease Or Buy A Car?

There are advantages and disadvantages of leasing a car. One major factor to take into consideration is that because you don’t actually own the car when you lease it, you could end up spending more leasing a car than if you were to buy one outright.

So whether or not you should lease or buy a car really depends on your situation and what you need the car for.

For example, if you would like to drive a new car every few years which is more expensive than what you can afford, then leasing a car would probably suite you well.

If however you don’t like the idea of paying every month for a car you will never own, and don’t mind driving the same car for a long time, then you may be better off buying a car and having the satisfaction of knowing that you own it.

Your current finances will also determine whether you should lease or buy, as if you have some money set aside then you can probably afford the down payment needed to buy a car. But if you are short on cash, then leasing a car might be your only option.

So as you can see from the above examples, leasing a car can actually be quite a good choice for a lot of people, especially if they are short on cash but want to drive something with style.

If you do decide to go ahead and lease a car, make sure you are aware of the following advantages and disadvantages of doing so.

Advantages Of Leasing A Car

• Most leases don’t require you to make a down payment, they may however ask for a deposit.

• Leasing a car allows you to drive expensive cars which otherwise you wouldn’t be able to afford.

• At the end of your lease, you can simply return the car back to the dealer and/or get a different model.

• You can easily get a car for a short period if you need to.

Disadvantages Of Leasing A Car

• Overall leasing a car will be more expensive than buying one.

• You only have the car for the duration of your lease.

• Most lease agreements will only allow you to drive a certain amount of miles. If you go over this amount you may get a penalty. So if you drive long distance you may not be able to lease a car.

• A lease does not cover insurance or maintenance, so you will not save on these costs by leasing a car.

• Your dealer may require you to pay for the cost of auctioning your car at the end of your lease.

Signing The Lease Agreement

If after considering the advantages and disadvantages of leasing a car you choose to go ahead with it, here are some things you should be aware of before signing.

Get A Closed-End Agreement

Try to get a closed end-agreement, as this will allow you to return your car at the end of your lease with the option of buying it. So if you really like the car, you could end up owning it outright.

Maintenance Costs

You will be responsible for maintenance on the car you lease. So make sure you know what sort of condition the dealer expects the car to be returned in, otherwise you will get fined.

Inform Dealer Of Intended Usage

If you plan on using the car a lot make sure you inform the dealer of this beforehand, otherwise they may fine you if you go over a certain number of miles.

On the other hand, if you know you are not going to be using the car very much, then ask if you can get a low mileage discount.

Manufacturers Warranty

The manufacturers warranty makes the manufacturer responsible for certain repairs and the condition of the car.

Make sure you know what this covers, as it could help you to avoid spending money on repairs the manufacturer would do for free.

Length Of Lease

Only sign the lease for as long as you need the car. This is for two reasons. First, getting a longer lease than you need is just a waste of money, and second, if you break your lease you will get fined.

In addition to this don’t let the dealer pressure you into getting a shorter lease than you need.

Sometimes they may try to push shorter leases on you so that you return back and get another car (which will cost you more money overall).