As an auto loan can lead to substantial down payments and put a pause on your dreams of buying anything else aside from your dream car, you can always consider opting for a car lease. A large part of car sales in the US comes from car leasing. So, if you are someone who doesn’t know much about this topic and wishes to make the most of a car lease, here are some tips to follow:
Understand your car lease and its various terms and conditions
If you are new to leasing a car, you should be well aware of how car leasing works. To begin with, you need to make a down payment, which is based on the value of the car. Once you are done with the down payment, your monthly payments begin. These last till the term of your car lease is over. What you should also know is that at the end of the lease term, you will be required to return the car. This means it should not bear any wear and tear. Otherwise, you will be liable to pay the penalties. So, maintain and take care of your vehicle properly to get the best out of the lease.
Know what you can negotiate and capitalize on the flexibility of prices
There is a whole lot of things that you can negotiate about on a car lease, so make sure that you research these options. These options include the purchase price option, the mileage limit, the down payment, and the lease money. All of these can be decided on a case by case basis. A car lease, in a way, is almost as similar to a loan. This means you can choose to pay a higher down payment and reduce your installments and other monthly obligations.
Pay heed to the mileage
To make the most of a car lease in terms of profitability, make sure that the stated mileage limit covers all your commuting activities – it could be your daily run to the office, weekend and occasional road trips, and many others. If you are able to drive fewer miles than the designated mileage limit, you will be able to make a profit at the time of resale. But, if you exceed it, you would end up paying more for each additional mile. For example, if you exceed by 10,000 miles and the cost for every additional mile is 30 cents, you would end up paying $3,000.
Know when you should exit
There are red flags in all kinds of deals, which should immediately prompt you to walk away immediately. Even car lease deals come with many such red flags. For example, if the car lease you want to purchase exceeds the car’s factory warranty, you should instantly avoid such kind of deal. Also, you should be aware of all the payments and fees much before you sign the deal. No such payments or even end-of-lease procedures should surprise you at the last moment. Validate each of these as mentioned during negotiations.
This is how you can make the most of a car lease. Car leasing is a potent car financing option, but just like any other financial product, you should know its pros and cons.
