Availing of a car lease instead of taking a car loan to buy a car might seem to be a bright idea, but there are many aspects of a car lease that you must check out before plunging into it. The various angles that you should investigate are:
Down Payments
The first aspect that you should look into is, whether you need to make any down payment for the car lease. Normal leasing practices do not envisage any upfront payments and as such, if you are being asked to make a down payment, you should reconsider your decision. Moreover, the money that you will pay upfront is non-refundable when your car lease ends. You should also consider the fact that if the car gets damaged or stolen, the loss and the gap cost will not be covered by your car insurance company.
Mileage Limits
Another important aspect of a car lease is that the leasing companies set a mileage limit of 45,000 miles over a three-year period and in case, you exceed it, you might have to pay an additional 20 cents for every excess mile. Most people find that 45,000 miles for 3 years or 15,000 miles per year is insufficient for the amount of travelling that they do. As such, you'll have to pay nearly $2,400 in excess mileage on an average extra 4,000 miles per year. If you do go in for leasing a car, you should try to negotiate for the extra mileage at the time of taking the lease.
Sales Tax
Many dealers will try to hoodwink you in various ways. It's, therefore, essential to read the fine print before signing for a car lease. The dealer might advertise for the lease rates and monthly payments, but he might not include sales tax, registration or title fees. The fine print might reveal that these are excluded from the advertised rates, but you would, in any case, have to pay for them if you take on the car lease. It's important to use a car loan calculator whenever you negotiate for a car lease or a car loan.
Damage Or Loss Of Car
If your car meets with an accident during the period of the lease, you'll have to pay for the repairs and other costs. This is a very important aspect that needs to be considered.
Car Leasing Or Buying
Many people find it difficult to decide whether they should buy a car or lease it. Some find it difficult to put forward the down payment and make the high monthly payments, if they have to buy a new car. They would much rather lease a car without realizing that even in the case of a car lease, they have to make monthly payments. Moreover, these monthly payments are just going down the drain without any gain, whereas in the case of a car loan, their monthly payments are gradually making them the owners of the car. It's an individual's own decision, but with the new car loan rates coming down, the odds are more in favor of car loans for buying cars.
