If you're not looking to put down big bucks to buy, leasing a car is a great option
There are many ways to get behind the wheel of a new ride, and leasing a car is one of the most common. Buying a car outright is an option, but many people don't have that luxury and have to finance a car or look at leasing. Luckily, both methods are viable, regardless of whether you're looking at new or used models. Let us shed some light on the basics of how to lease a car.
When you buy a car, unless you've paid the full sum in one lump payment, you will be paying for it in monthly installments until paid up, and it belongs to you. So, how does leasing a car work? In the case of leasing, the car never actually belongs to you; instead, it is more like a long-term rental. The monthly payment is much lower than when buying and is calculated based on the depreciation of the vehicle, plus additional charges and interest. There are restrictions on leasing, though, such as an annual mileage limit, which affects the terms and monthly payments. You are also not permitted to customize or modify the vehicle in any way, and have to return it after the term is up.
There are several car-lease pros and cons. Leasing might turn out to be right for you so long as you are able to live with the disadvantages. Once you have a grasp of all the pros and cons, you will be able to make an informed decision.
Be aware of all the pros and cons in the lease vs buy argument. If you want to own the latest models, leasing is great. Just remember it costs more in the end because you never actually own a car to sell again. You actually save money by buying, but your car will age and you won't be driving the latest and greatest. If money is that tight, consider buying a used car that still has some warranty left, or start by leasing a cheap new car - for example, a small hatch like a Chevrolet Spark. You can also buy the car you are leasing, but this works out more expensive than either option.
If you've decided leasing is right for you, these are the steps you should follow to get through the process as painlessly as possible:
There are several online lease calculators available that can help you play with the numbers to see what your monthly payment will be. Enter different values to see how the inputs change your payment amount. But, in the end, you have to do the negotiations yourself and you should choose the dealer offering you the best possible deal from at least three dealers.
There are several terms and numbers to consider when leasing, and you don't want to go into the negotiation without fully knowing the meaning of each:
Whether you are buying or leasing, with no credit score you can't do either cheaply. Bad credit might not preclude you from leasing altogether, but you will have a smaller selection of vehicles to choose from - or some dealer might offer you a lease on a used car instead. Either way, you'll pay for bad credit, whether this means having to cough up higher fees, or having to agree that you will be responsible for the car's repair and maintenance costs for the duration of the lease period.
To give you relatively free rein in terms of leasing choices, most leasing companies have some requirements, such as having a FICO Score of 700 or higher. The better the score, the lower your financing charge and the size of your monthly payment. If you don't have the required credit score, it might be a big mistake to move forward. Rather improve your credit score and get your financial standing in order and then go back for a lease with better terms.
In short, buying will always save you money and, if you are fine with driving your car for several years and selling it yourself, this is a prudent option. However, if you always want to drive new models sporting the latest technology, leasing affords you that opportunity. Just keep in mind that it costs you more in total at the end, you must adhere to the restrictions, and you don't get to keep the car to sell again.
A $50,000 Chevy leased over 36 months with a residual of 60% should have a total lease cost of about $1,368 per month. However, this is just a mean average that can fluctuate depending on circumstances, and other models may differ substantially.
The lease terminates at the end of the agreed-upon period. If you want to terminate it early, penalties will likely apply. It would be an expensive mistake, so don't break the rules of your lease, if possible.
This depends entirely on the season and lease-incentive programs offered; look out for zero-down lease incentives especially. The best deals are usually offered in the early spring.
Take advantage of spring incentives to lease your EV. But familiarize yourself with your state's EV incentives, which vary widely and may include grants, leases, exemptions, and rebates.
Failing to set a sensible mileage limit, taking the first deal offered, not negotiating, agreeing to monthly payments you can hardly afford, and leasing a rapid depreciator are all rookie mistakes, among others. To avoid these, always read the fine print of the car-leasing terms before signing.