Leasing may sound straightforward, but it is important to pay attention to the details. Here's some advice that will help make leasing your next vehicle a little less mysterious and intimidating:
- Shop around. Different dealers and manufacturers will offer different lease rates and are willing to negotiate for your business.
- Read the fine print. Find out ahead of time about all hidden charges, i.e. destination, security deposit, registration fees, lease-end service charges, etc. Make sure you know the full story behind the "special" advertised price of $199 a month.
- Stipulate a closed-end lease. If the actual value of the car at the end of the lease is less than its residual value, the lessor pays the difference You don't. Conversely, if the actual value is more, you have the option of buying the car for the fixed residual value, then selling it at a profit.
- Check on insurance rates for the level of coverage required by the lessor. The lease agreement may require higher liability limits and lower deductibles than you currently carry, and both will increase your insurance premium.
- Choose vehicles to lease that tend to hold their value well. The sexiest cars are not always the best buys in the world of leasing.
- Negotiate the price of the vehicle before negotiating a lease arrangement. This prevents the selling price from influencing lease negotiation. Go into the lease negotiation with the selling price already set.
- To avoid lease-end excess mileage charges, increase the mileage limit before you enter into the lease. Buying extra miles over the term of the lease is less costly than paying for the extra miles at the end.
- To avoid lease-end wear and tear charges, maintain the vehicle well during the lease period. Lessors will not hesitate to charge you for perceived ill treatment.
- Remember that if you decide to purchase the vehicle at the end of the lease, in the long run leasing may end up being more expensive than financing.