By Mashum Mollah
Leasing a car is somewhat similar to renting a car in the sense that you will be paying for the use of a vehicle that is owned by car rental or lease provider. The difference is that renting a car is for a short period, while leasing is for more extended use. If you are planning to lease a vehicle, here are some tips to help you get the best option and cheap car lease deals.
Consider the depreciation and residual value:
The lease price will be based on the depreciation value of the vehicle and other factors including interest rate and taxes. The depreciation value is the total difference in the value of the car from the start to the end of the lease. On the other hand, the residual value is the car’s final value at the end of the lease contract. Most vehicles decrease their value by half of their original price during the first three years of their use. The higher the depreciation value, the higher the payment rate will be.
Determine the mileage limit:
The mileage limit is the number of miles that you can travel using the leased car that is covered in the contract. Going over that limit will result in extra charges. Consider how much you drive and if the given limit is enough for the entire lease period. If you are looking to drive significantly more than the given mileage limit, look for another option that will meet your driving requirements.
Consider the down payment:
The down payment on a leased car is generally lower than a financed vehicle. This is one of the reasons why some people go for leasing rather than the purchase of a new car through financing. The amount of down payment varies, and while you will be given some discount if you pay more on the down payment of a financed vehicle, the total price will still be the same with a leased vehicle. Your monthly payment might be lower, but this is not because of a discount, but because of paying more on the initial fee. Find a down payment that you can afford and at the same time, ensure that you will be able to pay the monthly rate.
Take note of the lease term:
The lease term is the period that you will be locked into with the lease contract. Most contracts last for three years, although there are some offered for a shorter or longer period. Determine how long you will use the vehicle to ensure that you will continue the lease until the end of the contract. You will be charged a specific amount if you cancel your lease prematurely. The amount may be equivalent to the six-month payment of the rental. While the monthly rate may seem lower for longer lease periods, you may not be getting a cheaper deal because the total amount may still be higher than the total cost of leasing the same car for a shorter period due to the depreciation value.
Don’t be shy about negotiating. While there are prices that cannot be changed like taxes and the residual value; there are those that can be adjusted like the buyout price.
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