When you leasing a vehicle, it means that, you are renting a vehicle for a specific period, and then giving it back.
You should know up front if you are going to lease or buy. Negotiate with your sales person first before informing them that you are going to lease. Another avenue is to ask if the dealer has any subverted leases, which is a lease discounted by the factory usually offering low payments with a higher residual value.
Never lease a vehicle for more than three years since after this time anything you pay is strictly profited to the dealer. Normally, three years is the recommended time for a lease. When setting up terms, always go with a closed-end lease instead of an open-end lease.
This firmly sets the residual value of the vehicle, meaning the price you pay for the vehicle at the conclusion of the lease is protected. If the market should fluctuate, your price is secure. In addition, dealerships are required by law to disclose all expenses to you.
Some people find that leasing a vehicle works best for them. If you decide to lease a vehicle, you should know some things. First, you will need GAP insurance. This is a specific type of insurance for leased vehicles that covers the difference between the value of the vehicle and the total of lease payments due should the vehicle be wrecked during the time it is leases. The majority of leased vehicles have GAP insurance included in the payment, but follow up to ensure this is the case.
There are certain advantages and disadvantages to leasing a vehicle:
- More than likely, the monthly payments will be lower. You will be required to put down a lower down payment.
- You will only have to pay the sales tax on the portion of the vehicle financed.
- You will be able to drive a nicer vehicle for less money than if you purchased a vehicle.
- At the end of the lease, you do not own the vehicle.
- There is normally a limit on mileage (10,000 to 15,000 per year).
- In the long run, leasing is more costly.
- Charges for wear and tear add up quickly.
- Contracts are difficult to understand.
- Should your driving needs change, a lease is difficult to terminate.