The idea of shelling out a monthly car payment that does not eventually lead to ownership of a vehicle is not appealing to many people. But, for others, it works just fine. They simply see it as just another monthly expense, and every few years, they find themselves in a shiny, brand new car. If you are thinking about leasing a vehicle, here are some important things to think about before signing on the dotted line.
Picking Your Car
Pretty much any car for purchase is also available for lease, and you will have no shortage of options. You want to consider the same factors as if you were buying a new vehicle, whether it be gas mileage, safety rating, specific features and the like. But, when it comes to a lease, there is one additional thing to think about if you want to get the lowest monthly payment you can—the rate at which the vehicle depreciates. All cars take a hit once you drive them off that lot, but some lose their value much more rapidly, and you want to steer clear of these cars. Consumer Reports offers helpful information about this topic.
Negotiation is Still Possible
You may not think you can negotiate lease terms in the same way you would negotiate the outright purchase of a vehicle, but you certainly can. You are not bound to whatever terms are offered. The low payments that come along with leasing are very enticing and people may not think to fight for a better deal. Many in the know recommend negotiating the total price of a car before you even make mention of your intention to lease. Once that has been settled, talk about the lease. Several aspects are also open to negotiation like the mileage allowance, down payment and the purchase price once the lease is up.
Think Carefully about Mileage
When you lease a car, you will be limited to an annual mileage amount—usually around 12,000. If you return the car and you have gone over this limit, you will be charged a set amount of money for each excess mile. If you think you will drive more than this, investigate the option to pre-pay for extra miles for a discounted fee. There should be a clause in the lease entitling you to a refund for any miles you paid for but did not use. Some leases allow for even less allowed miles, lowering the payment. Before you are tempted to do this, think carefully about whether you need those extra miles.
The Purchase Option
Once the lease is up, you have the opportunity to buy the vehicle at a pre-determined rate known as the ‘’residual value.’’ In almost every instance, it will cost you more than if you had bought the vehicle outright in lieu of a lease. If you think you want to buy the car, research its estimated value. If you have to pay more than what it is deemed to be worth, try to negotiate with the dealer. If he will not lower the price, move on.
Kelli Cooper blogs about all things auto, from negotiating for a used car to how to teach your teen to drive; she recommends visiting http://www.kanetix.ca/toronto-car-insurance-on for more information on Toronto car insurance.
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