To lease a car, you simply make a small down payment followed by monthly payments for the term of the lease. When the term expires, you return the car. (And, in most cases, start the process all over again, since you'll still need to drive.) But there are tradeoffs.
1. What is a Car Lease?
A car lease lets you drive a cool new vehicle without the large cash expense or loan hassle of actually purchasing it.
To lease a car, you simply make a small down payment followed by monthly payments for the term of the lease. When the term expires, you return the car. (And, in most cases, start the process all over again, since you'll still need to drive.)
But there are tradeoffs:
2. Should You Lease?
Leasing is more beneficial than buying when you:
If you expect to exceed the mileage limit or that the car's exterior will be excessively damaged or the interior will take a beating by babies or pets, then a lease probably isn't for you. The penalties can be costly. Exceeding the limit can run you 10 to 15 cents per mile, while your car will be inspected by the dealer just before the lease expires for excessive wear and tear to evaluate charges.
3. How to Lease
Leasing a car is less complicated than buying one. But to get the best deal on the car you want, you still need to go through a series of steps:
4. Grilling Guide: Questions to Ask Before You Lease
What are the total lease costs?
They are likely to include a month's payment up front, a security deposit that's refundable when the lease ends, a non-refundable down payment, taxes, and registration and other fees.
Am I better off leasing or buying?
Compare the total cost of leasing with the cost of buying-if you were to extend your loan term to reduce monthly payments or purchase a used model instead.
How much will a vehicle cost to insure?
Call your auto insurance agent and ask for premium quotes on the car you want as well as a list of cars that cost the least to insure. Leased cars and purchased cars have similar insurance rates. They're based on the same series of factors. All the insurer knows or cares about is that you're driving the car and its risks for covering you financially. So if you're leasing or buying a red Corvette, your premium will certainly be higher than if you chose a silver Senata.
What are the lease terms?
Once you've agreed on the price, ask how many miles are offered on the lease as well as the terms of return and early surrender. Most dealers will slap you with thousands of dollars in penalties and report the deal-breaker to the credit bureaus as a "voluntary repossession," which can damage your credit score. Given some sense of what the costs associated with early surrender would be ideal.
What are the best lease deals now?
Car manufacturers offer lease specials all the time to move vehicles out of dealerships, especially at the end of new model years. Check local ads to be sure monthly payments listed include sales taxes and fees. Also, see if the lease requires a large down payment, bank fees and a security deposit. To determine what the latest lease deals are in your area, check Edmunds.com.
Leasing a car is a great option for some people, but the question of leasing vs. buying a car really depends on how you intend to use your car, and your long-term financial goals. Assuming a lease doesn't have to be a painful process, though; learn the jargon and common pitfalls to avoid, and you can get a great deal on leasing a car.
If you are wondering how to buy a car from a dealership, then you should know that the art of negotiation is your best friend. Whether you're talking to a new car dealer or a used car dealer, they are always happy to see new customers. That's because they hope to talk you into a sale that will leave them with a fat commission check. But you need to be ready before you walk onto that lot, or you might be pressured into buying a lemon.
Unscrupulous dealers use a number of car lease trade scams to run up fees and penalties if you trade in your lease, all the while telling you they're getting you a deal. Find out if a lease trade will work for you or if it's just hype.
When the time comes to buy a new car, people want to get the best deal they can find. Think about the best time to buy a car to ensure you're getting a good price.