5 Things to Be Aware of When Leasing A Car

Do you understand your responsibilities when leasing a car? People who want to lease a car do so because they want to drive a newer model of a car for less money than actually buying the car. But drivers need to be sure to read the fine print of the contract and understand what leasing a car entails…

The more you pay up front, the less your monthly payments will be. Pay up to $2,000 in advance for lower monthly payments. When you pay less upfront, your monthly lease payment will be higher. Take the “pre-payment” cash & deposit it in an interest-bearing account instead. This money will help you pay monthly lease payments.

2. Gap Insurance

The value of a car drops once its driven off the lot. If a leased car is totaled or stolen and your car insurance makes a payment on the value of the car, the amount may not cover the amount you’re obligated to pay. You would then have to come up with the difference unless you have gap insurance.
This policy would cover the difference. At the beginning of your car leasing process, ask if the contract includes gap insurance coverage. If it doesn’t, you should consider finding a car lease plan that does.

3. Don’t Go Over Your Mileage

Sometimes leasing companies will advertise low monthly payments because they have low mileage limits, the most common being a maximum of 10,000 to 15,000 miles. If you exceed those limits, you can be charged anywhere from 10 cents to 30 cents per mile.
It may seem like a small amount, but boy, do those miles add up! Know your driving habits before signing a leasing contract. If you know you’ll travel more than the maximum amount, find a contract that has a higher limit.

4. Fix Your Own Damage

If your leased car has damage, you could possibly be obligated to pay extra fees. If there is damage to the car, the driver can fix it with their own money before turning it in. If you choose not to, the leasing company will determine the value of the damage.

5. Don’t Lease for Too Long

Most lease contracts last for 2 to 4 years. Drivers who lease cars for too long could end up paying extra money in the long run for car maintenance. Lease a car for either 3 years or 36,000 miles, maximum. After that point in a car’s life, it is going to require maintenance.
If you need a car longer, consider getting an extended warranty. When a driver plans to drive the same car for a long time, its probably best to buy a car. You don’t want to pay for maintenance for a car that you don’t even own.

 

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