The basic appeal about car leasing is no need to pay finance or entire cost of the vehicle. You will simply pay as per the use of the car only for specific period mainly two or even three years or five or six. This does not mean exactly renting but principle is somewhat similar. Evaluation of lease is the matter of basic arithmetic. You have to consider basic four factors:
- Initial payment total including Capital Cost Reduction also called down payment and some extra fees
- Amount of monthly payment each
- Number of months in the lease term agreement
- Any additional charge possible in the end of lease
In a lease, monthly payment is completely based upon the difference between vehicle transaction price which is its capitalized cost and the estimate to be worth in the lease term end which means residual value. This difference is the calculated on the basis of interest rate or called lease rate, lease charge or money factor.
Typically the down payments as well as monthly charges are lower in a leased vehicle other than purchase ones outright. That is the reason why you get a better vehicle usually for the same amount you put down. There is nothing more to secure in a lease than its first month payment and security deposit, usually that is one month payment. The whole details vary sharply though. For many lease dealerships requires considerable down payment along with possible additional charges.
Nothing can affect your lease terms unless your credit scores. The tempting lease terms shown in TV commercials are just only for the customers you have top-nick credit history. An average credit means the bigger is the down payment or higher monthly payment. Generally a poor credit means no lease completely.
In a case, if your lease period goes up then simply return your vehicle to the dealer itself without worrying about trade-in or cost of selling to any private party. By providing the car in a good condition, nothing more you owe but nothing owned either. In most leases you get a option to purchase the car at the end of the terms and agreement at a encoded price. There is such possibility if you like the car really. However, it can be more expensive often over time than just buying it outright.
Just it is pays to shop while you go to buy a car; also it is prudent to shop around for the lease. Let a few dealers to compete to get your business. You may see one dealer waive down your payment or say cut down the monthly payment to get your business, other won’t do that.
You must make sure to compare the costs of same identical vehicles. To get a lease in less monthly payment and hefty down payment can cost more in overall than the one with higher payment monthly without any down payment. Calculate as math and consider what it comes to the total amount you need to pay both of now and by the lease term.
Naturally the new car dealer is a logically way to start the shopping, still there are many other options. Like leasing brokers or agents that leases several brands can beat the deals of new car franchise low the street. Even some banks and financial institutions offer consumer leases.
If you are opting dealers who have finance company in-house like GMAC or Ford Credit, in the end you can leave the car generally after lease with any dealer selling the same brand. Well prepared while car leasing.