How to Lease a Car Versus Buying a Car
Leasing a car instead of buying may be a good option if you like to get a new car every few years, want to get a good idea of how many miles you drive per year, and have a good credit rating. Lease payments will usually be lower than financing the purchase of a car. You can turn in a leased car at the end of the term and lease another new car.
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Instructions
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Determine which make and model of car you would like to lease. Cars with higher resale values will have lower lease payments. You should like the car you get, but some research into the resale value will help you pick one that has better lease terms.
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Go to the dealership and test-drive the model of car you want to lease. When discussing options with the salesperson, let them know you would like to see both finance and lease options for the car. Ask if there are any special lease programs offered by the manufacturer on the car.
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Negotiate the lease by focusing on the length of term of the lease, capitalized cost, mileage allowance and monthly payment. The term should be no longer than the factory warranty on the car, usually 36 to 48 months. The capitalized cost is the lease jargon for the cost of the car. It can be negotiated like any car purchase. Make sure the contract has enough miles for your annual driving. You can purchase extra miles on a lease contract. Compare the lease payment to a regular finance payment. There should be significant savings.
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Review the paperwork before signing the lease contract. Dealer tricks include putting your down payment into the cap cost without reducing the cost. A down payment should reduce the cap cost. The payment should include sales tax. Do not let them add tax after the negotiation. Make sure the contract has the amount of allowed miles you agreed on.
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Sign the lease paperwork, show proof of insurance and drive home in your new leased car.
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Tips & Warnings
Car leases require a higher level of insurance coverage than the state minimums. Check with your insurance agent for any extra costs before signing a car lease.
The interest rate of a lease is sometimes difficult to determine. Leases use payment factors instead of interest rates. If you are uncomfortable with the payment, negotiate further or try another dealership.
References
Resources
- Photo Credit car dealership 1 image by Alexey Stiop from Fotolia.com
