Leases take up a good chunk of the car industry these days. More and more people prefer leasing over purchasing new cars. Leasing is a good option for those who do not want to take a loan for a new car. Leasing terms usually last two or four years, and then the lessee will return the vehicle to the dealer. They can either continue leasing the same car, switch to another, or opt to purchase a new one, budget permitting. There are personal car lease deals that you can choose from. Many people commit mistakes when leasing cars. Here are some tips, so you don’t fall for the same trap.
Paying a high down payment
Paying a high down payment means that you will pay lower monthly payments. At face value, this will benefit the lessee. But with hindsight, paying a higher down payment may cost you more in the long run. What if you wreck the car only a few months after getting it? The insurance company will pay the dealer the value of the vehicle, but you will likely lose the money you paid upfront. It will be a loss to you, as the dealer may not refund you the down payment.
Not purchasing gap insurance
The dealership may offer you the option to buy the car at the end of your lease for a certain amount. That amount is the car’s residual value or the value of the vehicle at the end of your use. Now let’s say you wrecked the car before the lease ends. The insurance company will identify the car’s market value and pay the said market value amount to the dealership. But if the market value is less than the residual value, you will have to pay the difference from your own pocket, unless you have gap insurance. If you do, the insurance company will pay the difference.
Miscalculating the number of miles that you will cover in the car
A low-monthly payment may entice you to go with a specific lease deal. But a low-monthly agreement usually means that the specified mileage that you can cover for the duration of the lease is lower. Determine how much you are going to use your car. If you are going to use it on long trips, then you have to choose the higher monthly payment with a higher mileage allowance. If you exceed the specified mileage, you will have to pay for the excess.
Neglecting the car
If you neglect your leased car, the exterior and interior will deteriorate faster. At the end of the contract, the dealership will evaluate the condition of the car, and if it does not pass their standards, they will charge you a fee.
Going for a long lease
A longer lease means that the warranty will not match the lease period. This will force you to pay for maintenance out of your own money. Shorter lease terms – like three and four years – guarantee that the warranty will be the same period. You won’t have to spend on maintenance.