How to Determine Whether or Not to Lease Your Next Vehicle
Before you decide whether you should lease your next car or not, there are a few things to consider first. This article will describe how to determine whether or not to lease your next vehicle.
First and foremost, ask yourself whether you might want to end your lease early. These contracts are written so that leasers are discouraged from early termination. If you want to end your contract early, you might have to not only pay a fee to terminate, but to pay off the rest of the payments on your lease. For that reason, you should ensure you have both a stable life and a stable job situation so that you likely will never need to terminate a contract early. This is the most common problem present with leasing and should help when figuring out how to determine whether or not to lease your next vehicle.
If you are a person who drive quite often, such as more than 15,000 miles in a year, you may not qualify for a car lease. Newer limits on car leases generally state you may only drive 10,000 – 15,000 per year. Exceeding this limit will result in fees for “excess mileage” upon the termination of your contract. However, it is possible to “buy up” these extra miles when you know you will drive more than that, but you can only do this at the signing.
You are required to return your vehicle at the end of your contract without it receiving any damages outside of “normal” wear and tear. If there is any additional damage, you will be required to pay for them. Additionally, as with a purchased car, you are the one who is responsible for maintaining the insurance and upkeep of the vehicle, not the leasing company. Do not make that mistake.
Consider whether you want a car that frequently changes style. If so, you may not want to lease. This kind of car will very quickly lose their resale value, meaning that the overall residual lease value will decrease. When this occurs, it translates into a more expensive monthly payment on your lease. With that in mind, a fad car might come with a higher payment per month than a car that is generally more expensive but comes with a better history of resale.
By leasing a vehicle, you do not retain any ownership to it, unless your contract happens to be a lease-end; in fact, a third of all leasers choose to buy this. When you lease, it is not much different than if you had purchased something with a loan, meaning the bank officially holds the title and retains all ownership until you have paid off your loan in full. The only difference is that when you use a loan to buy the vehicle, you will build up equity and when you lease, this will not happen.
Your credit rating must be sufficient when you lease, because this will generally require that you put down a smaller down payment. For this reason, your credit rating must be better than that is required for taking out a loan, considering that the risk of lending you the vehicle comes much higher to the provider of the lease. If you generally make your credit payments on time and do not have a whole lot of debt on your plate, your credit history should only reflect good things. Otherwise, you will more than likely have to pay a significantly higher rate of interest in order to lease or worse, be denied.
When you lease a vehicle, you have the benefit of being able to drive a new car every two, three or four years. However, during this time, you will always be making a monthly payment. This seems to be an acceptable trade off to some people considering they still retain the benefit of constantly having new vehicles that is always covered under warranty. However, if you are the type to prefer higher payments, but then experience a period of not having to pay a dime, you will probably prefer to buy your own vehicle.
Your health is also a factor with signing a lease, since medical problems can prevent you from being able to complete a lease. It is a known fact that neither health problems nor even death can allow for a leased car to be returned. Like loans and mortgages, leases are a financial obligation.
Ask yourself these questions, which should help you in your quest of how to determine whether or not you should lease your next vehicle.