“Should I buy or lease?” That’s a question most everyone has dealt with while searching for their perfect car. While there can be some hidden risks associated with leasing, there are also a lot of benefits depending upon your chosen lifestyle. Here are several things you should consider before making the decision to lease your new automobile.
Negotiating Your Lease Contract
Leasing a car is nothing like grocery shopping. When you go grocery shopping, there is no way you could negotiate with the cashier for a dollar off of your carton of eggs. However, when you are negotiating a lease contract, you can negotiate all you want. Here are some tips and tricks to become a pro haggler:
First, you will want to collect several different quotes for the same car ahead of time. That way, you can get a good idea of the true worth of the car, so you aren’t scammed. Second, do everything you can to bring someone you trust along with you. That way, your buddy can keep you in check in case you begin to fall for any sweet-talk. However, whenever you discuss the lease on the phone or in person, always talk negatively. Say things like, “I don’t know if we can afford it,” or “maybe we should keep looking.” That way, the sales associate will feel more obligated to haggle.
It is common wisdom that, if it seems too good to be true, it probably. You can end up being swindled into paying more than you think for your new car. Before you sign any contract, make sure that you know about all upfront fees and hidden fees throughout the term of your lease. For example, many people who lease cars fall victim to down payment fees, termination fees, and even interest and taxes.
Your insurance rates usually depend upon your driving record, but they can also change depending on your choice of leasing versus buying. Since leasing is higher risk than buying, you will most likely want to purchase gap insurance to protect you while you lease. This may increase your insurance costs by 3–10%.
Furthermore, if you are trying to decide between several different models or years, the cost of your insurance can also fluctuate even further. Make sure you research ahead of time if there would be an increase in insurance costs for your desired car or else you may get trapped into riding something past your monthly budget.
The great thing about leasing is that it can give you an opportunity to have a car that you would not normally purchase yourself. So, in a way, you get the chance to have more bang for your buck. This is because, when you lease a car, you are paying for the car’s depreciation and taxes rather than its actual cost to own. So, if you’ve been really wanting a luxury car but buying isn’t in the budget, you should consider leasing instead.
For example, there are several European car models you can choose from if you want to drive something other than what you’re used to. Yep, that could include Mercedes and Ferrari—and who wouldn’t want to ride one of those beauties for a time?
Taking Care of a Leased Car
As a general rule of thumb, take care of your leased car like you would take care of a rental car. In other words, you must remember that you are leasing your car, and that it does not actually belong to you. This means that you need to take very good care of it, especially if it is a luxury car, or else you could be hit with heavy reparation fees. Make sure that you clean the inside and outside often (that includes waxing!), and remember to check your tires and oil frequently.
While leasing may not have many adverse effects on your insurance costs, they do have the potential to drag down your credit score. When you lease out a car, you are taking out an installment loan. Fortunately, installment loans are treated differently than credit card debt; therefore, your credit card company will not see your car lease as adversely as credit card debt.
However, if you skip payments on your lease, your credit score will decline. So, make sure you keep this in mind as you go through the leasing process. You will want to ensure that you have the funds to pay your lease or else there will be consequences.
Want to Leave?
Unfortunately, ending your lease contract early is not an easy process. If it was easy, then your car lender would run the risk of people coming in to borrow a car for special occasions rather than for long term—which doesn’t make them any money. So, while it is a sticky business for the lessee to turn in their car before the end of their contract, it makes sense. Basically, if you decide to end your contract early, you will most likely have to negotiate a buyout price and your credit will probably take a hit. That is definitely something to remember before deciding to lease.
Benefits to Leasing
While there are always additional risks and costs to leasing, there are also a lot of benefits. Depending on your chosen lifestyle, leasing might just be the right idea for you. Those who tend to benefit most from leasing are usually those who enjoy trying out new vehicles or get bored of riding the same ride every year. If this sounds like you, then the monthly lease and extra fees may be worth a nicer car and greater flexibility.
Do Your Research
In the end, the best thing you can do before leasing a car is to do your research ahead of time. Nobody wants to get roped into a contract that they can’t keep. Make sure that you are aware of all the pros and cons associated with leasing. Don’t be the naïve customer who ends up losing more money than necessary.
Deciding to buy versus lease can be a tricky choice. However, if you take the time to consider all the points discussed, you will be adequately prepared to haggle like a pro, plan wisely, and make the right decision. Doing so will—hopefully—land you the car of your dreams.
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