How Does Leasing a Car Work?
Have you ever been on a road trip and rented a car that had all the latest technology, and wished you could have kept it? Leasing a car gives you that option and is similar to renting a car long-term. It involves an agreement between you and a lessor (the company that owns the title of the car), an upfront payment, and monthly lease payments, which allow you to drive the car for several years. When the lease ends, you return the vehicle to the lessor, at which point you can begin another lease, buy the car, or opt not to have a car.
If you’re interested in leasing a vehicle, you’ll learn here how the process works, the pros and cons, what is required of you, and how to know whether this option is right for you. Franchise car dealerships have all this detail and more.
What Is a Lease Agreement?
As mentioned above, a lease agreement defines the terms and conditions of your use of the vehicle. Due to the fact that you are not the owner of a leased vehicle, the contract covers:
- How long you can keep the car (lease lengths tend to be four years or less)
- The number of miles you can put on the car each year you have it, which is usually between 10,000 to 15,000 miles per year
- The amount due upfront and the monthly payment, which is calculated using the depreciation of the car
- The fees for the end of the lease and termination before the end of the lease
- What kind of damage is considered excessive damage and the fees for incurring damage beyond normal wear and tear
- Penalties for missing a monthly car payment
- The rent charge (comparable to auto loan interest)
How Does Leasing a Car Work?
Preparing to lease a car looks much the same as preparing to buy a new or used car. The process begins with checking your credit score and overall financial health to make sure you qualify to lease. Leasing companies look for a FICO score of at least 700.
If you determine the lease option may be good for you, it’s time for the fun part: selecting your car! As you review your top car choices, make sure you test drive these vehicles at a new car franchise to ensure the car is a good fit for you.
When you finally feel comfortable with and understand all the terms of your newly established lease agreement, read it through once more and you’re ready to sign!
The Benefits and Drawbacks of Leasing a Car
One of the main reasons people lease cars is that the lease enables them to drive newer or high-end cars at a lower car payment compared to purchasing the car. When leasing, you make a small down payment and minimum monthly payments for the full term of the lease. Leased cars are most often covered by the manufacturer’s warranty, and you won’t have to deal with selling the car when the lease ends; you simply return it to the lessor.
How to Decide if a Lease Makes Sense for You
Leasing isn’t for everyone, but if your goal is to try out new auto technology with low monthly payments and a small down payment rather than ownership and equity, a lease could be well suited for your needs.
For further information on leasing a car, contact Dick Hannah Dealerships today.