Everyone’s on the move these days, and it’s not always easy to keep up with the most modern trends. That’s why automobile leasing has become such a well known alternative for new car drivers. Some industry insiders will be adamant that leasing is the most cost-efficient way to drive the newest models, but not all leases are good deals.
The secret to finding a great lease is the ability to distinguish between an exercise in up selling and a good deal.
The initial step to finding a good car lease is getting the cold hard cash facts. Know if there are any down payments or ufront charges owing at the beginning of the lease term. A down payment is a total sum amount that you may be required to pay in cash, non-cash credit or through a trading allowance. The down payment will decrease your monthly payment, however, you should think twice before putting money down on a lease. This practice goes against the very general rule of leasing, which is a plan that permits you to drive a vehicle without spending any cash up front, mostly because the money is not refunded at the end of the leasing term. Another big disadvantage of making a down payment is that if the car is stolen or damaged, your gap insurance will not cover the down payment amount.
Limit on Mileage
Every lease contract includes a mileage limit. Many leasing companies will allow you a limit of 45,000 miles over the course of a three-year lease. While this may look like a great deal, you need to consider that it’s only 15,000 miles yearly, and just over 1,000 miles monthly. People who commute for work will easily exceed the allocated mileage limit, and even those who work from home can have a hard time staying within the 15,000 mile yearly limit. If you exceed your mileage limit, the penalty can be as high as 20 cents for each extra mile. This can immediately add up over the length of your lease. An additional 4,000 miles yearly over the length of a three-year lease contract will end up costing you an additional $2,400 in extra mileage charges. Be realistic about your mileage requirements when signing the contract, particularly if you plan to commute long distances on a regular basis. Mileage limits are usually flexible, so consider padding the miles that you expect to use. It is less expensive to allow for extra miles in your agreement before you sign, than it will be to pay the extra charges at end of your contract.
Tax on Sales
This is a necessary evil that you just can’t get away with, whether you’re leasing or buying a vehicle. Sales tax is usually capitalized and will be added to your monthly payments, however some dealers choose not to incorporate it in their initial calculations. As a result, the advertised lease settlements will be lower than the actual amount due. If you read the small imprint in a lease advertisement, you’ll likely see that “sales tax is extra”. Read the ads before you visit the dealer, and check the contract cautiously before you sign. Watch for sales tax and other hidden costs that are not integrated in the advertised price. Title fees and registration are other unavoidable charges that can also slip through the cracks and surprise unknowing clients.
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As in all business transactions, there is fair and unfair practice. Your best tool in finding good car leases is to be an educated consumer, and be aware of all of the terms and conditions.