So, you’ve found yourself without a car. Living without a car can be absolutely terrible. You don’t have the freedom to go wherever you want, whenever you want anymore. You have to rely on public transport, and heaven forbid, your legs to get you to where you want to go. It can be a trying time in life.
Don’t panic! If you don’t have the money to buy a new car upfront, you have the option to lease one. Leasing isn’t for everybody, but it can be the perfect option for others. Read on to find out what you need to know:
What Are The Benefits Of Leasing?
Leasing is a shorter term option as opposed to buying, and has many benefits. One of them being you only pay while you need it, and then return at the end of your lease. There are low repair costs too, as your warranty will cover most of them. There are typically lower monthly payments, and no down payment, so if you have no cash now, it could be the right thing to do.
Remember – you also get a new vehicle every few years, so you could even start looking into fancy cars like the BMW offers from ICL. You can’t always do that when you buy your cars outright.
What Is The Length Of The Lease And The Key Contract Terms?
Your lease will usually last anywhere from 2-4 years. The contract can be wildly different from place to place, so make sure you look into the specifics, such as how many miles you are permitted to do. Looking into terms and any hidden fees that you may not be aware of will help you to make the best decision.
- Gross Capitalized Cost – this is the sticker price of the car. It’s negotiable, though, so you shouldn’t pay full price.
- Adjusted capitalized cost – this is the price of the car after negotiation, including rebates, trade in, and down payment.
- Residual value – when you take back the car at the end of the lease, the carmaker estimates what it’s worth. The higher the residual value, the lower the depreciation and the lower your payments will be.
- Deprecation – how the car lowers in value over the months you will be driving it.
Nothing like this is without risk, so following maintenance requirements is crucial. You’ll need to be careful, as you’ll have to pay any extra wear and tear charges if you don’t. Bear in mind that if you go over your mileage, you will be required to pay another fee, usually per extra mile.
The fact that the car doesn’t truly belong to you isn’t a risk, but it’s something to bear in mind.
The biggest risk is probably looking to end the lease early, which can come with thousands in termination fees. One of the only options is to get somebody to take over your lease, but this can be difficult and stressful.
Knowing The Right Questions To Ask
If you decide that leasing is for you, then you’ll want to make sure you ask the right questions. Is GAP insurance included? This will protect you if the car is stolen or written off in an accident. Make sure you ask what the warranties cover, and which services and repairs you’re responsible for.
It’s important to make sure you find out the total cost, and don’t just sign up due to seemingly low monthly payments.