Leasing a car rather than buying always looks like an attractive option, after all, you get to drive around in a new car without parting with a huge amount of cash upfront. There are things that you need to take into consideration, however, and you do have to weigh up the long-term costs of leasing against buying a car that you can keep going until it no longer runs for instance. Here are 5 things you should know about leasing to help you make up your mind.
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Benefits of Leasing
I think everyone is entitled to a bit of luxury and if you are happy to make a monthly payment long-term that is exactly what you will get, a shiny new car to drive around in. Newer cars not only look good, but they are less likely to break down or need attention from a mechanic, so you should benefit from reduced maintenance costs, which gives you more money to spend on yourself. You also have more control over the amount that you spend on your car, with one simple monthly payment, there shouldn’t be any surprises, it makes it a lot easier to budget.
The Risks Involved
There are always risks involved with leasing a car. You are liable, for instance, for any repairs that the vehicle needs, including cosmetic damage. While the leasing company will check fair wear and tear, anything that is not considered within this policy will need to be fixed at your expense. You could also face an extra charge if you go over your annual mileage cap, you really need to understand what your agreement says when you lease a car.
Length of Lease and Key Contract Terms
The length of time you want to lease a car for is up to you. Typical contracts are for 24, 36, 48, or 60 months and generally speaking the longer the term that you pick then the lower your monthly costs will be. Leasing contracts do all differ, for instance, many have an annual mileage cap, so you do need to check them carefully before you sign up for anything. You could always consult a terminology guide to make sure that you are fully informed before you make a decision on anything.
Financing and Payment Options
Before you lease a car you are going to have to make a down payment. The higher down payment that you make, the lower your monthly costs will be, so it could prove a wise decision to pay as much as you can as a down payment. There are finance options available, so have a look and see if they charge less interest than the leasing company will. Leasing a car can prove difficult if you have a poor credit history. You might need to work on your credit score before you can finance leasing a car.
Ending your Lease Early
In many cases, it is just not feasible to end the lease early. Often, you would have to return the car and still pay the monthly leasing fee. You can, sometimes, find someone to take over the lease for you, but this can be difficult and time-consuming. Only enter into a lease agreement if you are sure that you can handle the long-term commitment.