There are many advantages to leasing a car but it’s important to compare different lease programs available. Contact our local lenders and tell them what you need.
Similar to buying a car, it’s important to compare various lease offers and negotiate the best deal possible. There are many factors that can be negotiated in order to lower the price of the lease. The more you know how a lease works the better deal you can strike. Our car leasing guide can provide you with valuable information on comparing a lease vs. buying and as well as informing you to your rights under a lease. See Federal Reserver.
Keep in mind that many aspects of the lease are negotiable and affect what you’ll pay in a lease. Use this checklist to possibly lower your lease cost:
The price or value of the vehicle. The lower the price the lower the lease cost.
Due “at signing” payments such as security.
The term of the lease.
The mileage allowed and the price for excess miles.
End of the lease or early termination fees.
The price to purchase the car at the end of the lease.
Gap insurance in the event the car is totaled or stolen.
Closed End Lease—Most consumers prefer this type of lease because it lets them return the vehicle at the end of the lease and walk away without purchasing it. You don’t have to worry if the car lost more value (depreciation) than originally expected when the lease was first signed even though your lease payments were based on the original depreciation expected. As an example, if a $24,000 car was expected to depreciate $10,000 in three years but instead, it depreciated by $12,000, that extra $2,000 in depreciation is absorbed by the car company not you. The only money you might have to pay at the end of the lease is excess wear and tear and mileage. Typical annual mileage allowed is between 12,000 and 15,000 miles. Anything over the amount allowed in the contract is excess which you have to pay for.
Open-end Lease—This type of lease requires the lessee (the person who is leasing the car) to make a balloon payment at the lease end for the difference between the residual value and the market value. There is some risk involved with this because the car might have depreciated (lost value) more than originally expected resulting in the lessee paying the difference to the car company. Businesses often opt for this type of lease because it has no mileage limits.
Single payment lease—Also known as a one-pay lease, the lessee pays a lump sum upfront for the car instead of making monthly payments. You don’t pay for the entire value of the car but except for the depreciated portion of the lease. You pay interest on the residual portion saving some finance charges. You should save on sales taxes because a monthly lease payment calculates sales tax on both the depreciated payments and the interest. By paying a lump sum, you’ll pay on the depreciated amount only. In order to know whether a single payment lease is worth it, ask the car dealership to compute both a monthly and lump sum payment and see which is cheaper.
Subsidized by manufacturer lease—Also known as “subvented” these leases are special offers made by the car makers to promote particular car models. They are heavily advertised usually nationally so any dealer belonging to that car manufacturer will offer the deal. These leases offer incentives such as no down payment, a longer lease term, a discounted price, and a lower interest rate. They usually apply to specific car model and trim so sure it applies to the specific car you want. These are usually excellent deals for the consumer.