Thinking of Leasing a Car? Things to Know Before Taking the Plunge

Leasing a car sounds like a good deal to most drivers simply because they can literally drive their dream car without paying a huge amount for it. It sure is a good plan, but if you don’t do an extensive research and understand what leasing entails; you won’t be smiling at the end of the lease’s term.

So before the leap of leasing a car, here’s what you need to know

Upfront payments

There are some fees you have to pay upfront for the car lease. Well, these are “hidden” costs that are not always listed in the fine print of certain car lease deals. They might include acquisition fee, delivery cost, tax and more. But all that depends entirely on the leasing company. It’s also important to note, these costs are not down payment.

When it comes to car leases, down payment is required. In fact, you should never put any form down payment on the car lease because you’ll stand to lose the money if the car is stolen or totaled.

Maintenance costs

Once you lease a car, you have to foot the bill for all service and repair costs. Also, once your lease expires, you have to pay for any damage you cause to the car during your lease. So it’s extremely important to take good care of the car.

Lease negotiations

Don’t be fooled that leases cannot be negotiated because they come straight from the manufactures. It’s just like buying a car; you can talk yourself into a good deal. Try and negotiate the terms, the interest rates, upfront fees if applicable, capitalized fees which is basically the price of the car –nothing is impossible. If you have a good credit score the better because it gives you the confidence to negotiate for an excellent deal.

Mileage

Lessees need to you pay close attention to mileage terms to avoid extra costs when leasing a car. Inquire about the annual mile limitation and the cost per mile for excess miles.

Residual value

This refers to the estimate of the car value at the end of the lease. The residual value is important because it determines your monthly payments and depreciation cost. The higher the residual value the lower the monthly payments and depreciation cost.

Some cars depreciate faster than others, so opt for the one that does not lose value quickly.