Questions You Should Ask
Before You Lease a Car

Car leasing is a method of automobile financing.  Some people may use auto leasing and auto purchasing interchangeably.  This is incorrect.  Car leasing finances the use of a vehicle, while an automobile purchase loan finances the purchase of the vehicle.  If you’re considering leasing a vehicle, there are many car leasing deals available.  Take advantage of online resources to find the best car leasing deal for your particular situation. 


 
Lease Or Purchase

Obtaining an automobile is probably the biggest investment in a person’s life besides buying a home.  Making the wrong choice could cost you thousands of dollars.  Therefore, you may be wondering which is better for you.  It’s important to understand that no one can give you a definitive answer since the answer depends on many factors.  You need to consider what is financially advantageous to you as well as your personal priorities.

One thing to consider in the way of priorities is whether having a new auto every few years and no major repairs to worry about is more important to you than long-term cost.  If this scenario describes you, then leasing may be the way to go.  On the other hand, some people may be more concerned about long-term cost savings than lower monthly payments.  Another factor to consider is whether ownership of your auto is more important than no down payment and low up-front costs.  If you are looking forward to paying off your auto and being debt free for a few years afterward, then purchasing may be the route for you. 

Differences Between Leasing And Buying   

Purchasing a vehicle means that you pay for the entire cost of the automobile.  You can drive the automobile as much as you want; it does not affect the total cost.  However, some expenses to consider when buying a car are that normally you’re expected to put down a down payment.  You need to pay sales tax in cash, or you can roll them into your loan.  Additionally, you pay interest on the total amount of the auto you purchase.  Your credit score determines the interest.  The first payment is due a month after signing the contract.  Once the contract is signed, you are free to sell your vehicle or trade it in for a different one.  Bear in mind that vehicles depreciate in value.    

In contrast, you only pay for a portion of the vehicle’s cost when you lease.  This is the part that you use up for the length of the lease.  You can choose not to make a down payment.  Generally, you only pay sales tax on the monthly payment.  Another fee that you’re expected to pay is called a money factor.  This is very similar to the interest on a purchasing loan.  Some additional fees are a security deposit and other fees, which you don’t pay when you purchase an automobile.  Your first payment is due at the time you sign the contract.  This covers the month ahead.  Once the lease contract expires, you have three options.  You can resale it for its depreciated value, you can return it, or you can purchase it.   

Questions You Should Ask Before Signing A Lease

If you decide that leasing is for you, there are questions you should ask before signing the lease to make sure you get the best leasing deal.  You don’t want to find yourself in a dilemma when you’re presented with fees you were not expecting.  The following questions should help.

The first question you need to ask is in regard to the total amount due at the time of signing the lease.  Make sure that the amount you’re given includes the security deposit, registration fees, title fees, capitalized cost reduction, and the monthly payment that you will pay upon signing the lease.  Ask specific, direct questions to avoid unpleasant surprises when you sign the contract.

The second question you need to ask is in reference to the length of the lease.  Make sure you understand or you see in writing the terms of the lease.  Normally, an auto lease is 24, 36, 48, or 60 months.  However, there are odd terms as well like 39 months’ leases.

The third question you need to ask to make sure you get the best car leasing deal has to do with the free miles allowance.  You want to make sure you find out what happens once you reach that allowance.  Usually, a lease allows 12,000 or 15,000 before you start incurring charges on a per mile basis.  The charge can be anywhere from 10 to 25 cents.  Keep in mind though, that miles allowance is negotiable.  Don’t feel that you have to accept the first number you’re given. 

These are a few of the most important questions you need to ask when leasing a vehicle.  There are many more to consider.  Do your research.  LeaseGuide.com is a good resource to use when considering a car lease.  Another good resource is bankrate.com.  A little research can go a long way in ensuring that you find the best car leasing deals available.  

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