A car lease is basically a commercial product often offered by big companies such as the Longmont car dealerships. It allows an individual to take a vehicle home by paying a small down payment followed by monthly lease payments while the term of the lease is still applicable. When the term of the lease ends, the lessee may return the car or ask the dealer for an option to purchase the vehicle.
Leasing a car may be beneficial to some people, but it might not be able to offer the same advantages to others. Leasing may work for you if:
You don’t have enough budget to buy a car
You want to drive a car with a price that’s beyond your capacity to buy
You can’t possibly exceed the mileage cap required by most lease contracts
If you able to meet the above conditions, you can most probably benefit from a car lease. But leasing a vehicle can have some drawbacks. So before deciding to rent a vehicle, it is important for you to know that:
You are only renting the car. It won’t belong to you when your lease expires.
If you keep on leasing a car for a long time, the cost you spend for leasing several cars will certainly exceed the price of a new vehicle.
Leases can be associated with penalties especially if:
Your car’s mileage exceeds the agreed number of miles per year
You don’t clean the car’s interior and exterior according to the dealer’s specifications
You cause significant damage or wear and tear to the car and lowered it’s performance
You want to return the car before your lease expires.
If you plan to lease a car, you don’t have to tell the car dealer about it until you have chosen a car and negotiated its purchase price. This will put you in a better position to negotiate a better deal. Here are some tips you might want to apply when you apply for a car lease:
Select the type of car you want to use without letting the dealer know your intention to lease. Prepare a list of car types and models in your price range.
Once your final list of vehicles is finished, ask the dealer for a test drive. When testing, you need to give particular focus on the comfort, safety features and maneuverability.
Once you are done testing the vehicles, you should be able to determine the lease of each vehicle and compare it with your capacity to pay on a monthly basis.
Once you have chosen your vehicle, be ready to negotiate for a purchase price. When you know the purchase price, you will have a good chance of negotiating a lease price that is quite proportional to the purchase price.
Negotiate. Propose a lease for the vehicle. Now that you are aware of the purchase price, it would no longer be difficult for you determine a fair deal. A good price should fall somewhere between the manufacturer’s suggested retail price and the dealer’s wholesale price.
Once you have made a deal, it’s time for you to pay the down payment. Remember the larger the initial amount you pay, the lower your monthly payments will become.
Always make payments on time to avoid penalties.
Avoid turning in the vehicle before the end of the lease contract because it can result in penalties – unless you intend to trade in the car to lease another unit.
Lori Palermo is a corporate consultant who is experienced in the areas of fund administration, corporate solutions, human resources, technology and small business. He likes to share his knowledge about business and human interests. .