Here Are Some Things To Look Out For When You Lease A Car
Low advertised lease rates are a way for car companies to grab your attention. If you're anything like me, it makes you wonder how much the car is worth relative to its price. If you dig deeper, however, you will see that the price is based upon the assumption that you have never driven the car and that you pay a large down payment when signing.
Divide the down payment by the term of your lease and you'll likely pay an additional $100 per month. This suddenly makes it seem like a bad deal. This is the bright side. The advertised rate is also based upon an exorbitant MSRP price. Only fools would pay that much. You can drive the car for a reasonable monthly cost by negotiating a lower price.
Select a Good Vehicle
As depreciation costs are more important than the sticker price, make sure you choose a manufacturer or vehicle that has a good resale market. It may be more affordable to lease a nice car that retains its value than a car that is prone to sinking when you take it off the lot.
You should ensure you have enough mileage to allow for your driving habits. If the overage rate per mile is not too high, it might be more cost-effective to purchase additional miles at the end than paying more throughout the lease. This depends on how much extra mileage costs. You're likely to pay at least $.20 per mile for gas, which is manageable for most people.
To be able to negotiate more miles than you actually need is a great tactic to ask for.
Most states only charge sales tax for the amount of vehicle value used during the lease period. What you actually pay for. Sales tax must be paid in Texas and Illinois on the entire amount of the vehicle. Chicago residents are charged an additional 8% tax every month to register their leased vehicle at a Chicago address. This was something I discovered the hard way.
You shouldn't expect routine maintenance to be included. Many people believe that the dealer is the owner of the vehicle and will take care to keep it in good condition for future resale. Leasing is a financing option that is similar to other options.
However, major problems should be covered by the warranty. These are very rare with a new car. A new car has the advantage of having relatively low maintenance costs for the first three years. My first car was a used one, as I thought it was smart to reduce depreciation. I ended up spending a lot of money and time fixing various issues that arose over the years.
I spent $1,000 approximately every six months on something until the transmission finally failed shortly after I put new tires on it. Ouch! It also happened just as I was paying off my loan. It is likely that you will need to pay some money for tires and breaks over the term of your lease. If they are required, you will have to pay to have them replaced once you have turned in the vehicle.
In the event of a move, make sure that you are able to return your car to the dealership. In the event of a move, you don't want your car to be shipped back across the country.
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All the usual rules for car purchasing apply
You should always bargain hard and not pay too much interest. Multiplying the "Money Factor", by 2400 will give you the APR. If you accept the dealer's first-rate, the dealer will likely increase the markup. Negotiate terms with banks, other institutions, and the dealer. Each trade-in should be handled separately. Do not be afraid to walk away. It was honest of me to visit the nearby dealership before I made any commitments. I saved about 9% on my monthly payment.
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