Is Leasing a Car Right For You?
It’s like renting a house, but you know, a car.
- Cars 101
- Guides & Gear
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So you’re in the market for a new whip? Congrats, you’ve come to the right place. Well, not exactly the right place, we’re not car salesmen. At least not anymore. You have come to The Drive, as we are a font of new and used car knowledge, including buying and leasing cars.
For those uninitiated with the process, leasing a car is just another way of getting a new car into your driveway. Unlike financing, or buying outright with cash, you don’t own a leased car. It’s still owned by the leasing company, which is the car’s manufacturer, for the most part. It’s an attractive option for many, as it offers you the chance to have a new car every few years and reduces the long-term maintenance most cars require.
But is a lease right for you? How does it work? How long can you lease a car for? And what are some of the pitfalls of leasing said car? Don’t fret about the details, as the editors at The Drive have leased a few cars before, as well as leased cars to people, so stick with us and you won’t get screwed.
What Is Leasing a Car?
Leasing a car is a lot like renting an apartment. You find a car you like and, in the simplest of terms, you pay a monthly payment just like you would an apartment. At the end of the lease terms, you return the key and be on your merry way. And like an apartment, you’ll also put down a security deposit, which guards against damage when it comes time to return your vehicle to the dealership.
How Do You Lease a Car?
Head to a dealership, ask to test drive a car, say you want to lease said test-driven car, pay the person in front of you, leave the dealership with said test-driven and paid-for car. You’re done congratulations!
In reality, it isn’t much more complicated than that. You’re going to go through most of the same steps as if you were purchasing a car. There are a few key differences, though. You won’t have to do a lot of the financing documents as if you were purchasing a car. You will have to fill out lease agreements, agree on the term of the lease, agree on the mileage the lease allows, and determine if leasing or buying is right for you.
As mentioned above, you’ll also likely need to put down a security deposit.
How Long Can You Lease a Car?
The average lease term is between 1-2 years. However, leasing companies have 3-4 year leasing options as well. Those come with different leasing terms, though, so you’ll want to read your prospective lease carefully to make sure it’s right for you.
Longer leasing terms are also quite similar in terms of payments to financing a car outright. It may be in your best interest to secure financing through your bank or a third-party lender compared to leasing. Make sure you’re not getting taken to the cleaners.
How Many Miles Can I Put On a Leased Car?
That will depend on your specific lease terms. Most leases allow between 10,000-15,000 per year. Though there are higher options, those cost more money. At the end of your lease term, though, if you go higher than the agreed-upon limit, the leasing company will charge you extra for each mile.
Car Leasing Terms You Should Know
Ready to get schooled?
This is the legal document you sign that puts out what you’ll be paying, how long you’ll be paying that sum, how many miles you’re allowed to drive, what sort of maintenance you need to worry about, and other legal liabilities you incur upon signing the dotted line. READ IT CAREFULLY.
The opposite of leasing is financing a car. You strike a deal with a lender who pays the dealership the sum total of the car’s worth. You then, during the period of months and years, pay the lender off until you’re done. At the end of the payments, you own the car outright, unlike a lease.
Just as you would if you were purchasing a car, you’re going to put a down payment down on a leased car. How much you put down will change your monthly payment. That said, you don’t have to, but don’t you want to reduce your monthly payments?
Leased cars tend to have higher insurance premiums due to the leasing company’s requirement of higher coverages, i.e. they want their property returned in tip-top shape. You’ll have to consult your insurance provider to determine what your monthly payment would be on a leased automobile.
Modifications of any leased car are strictly verboten, meaning not allowed for those who don’t know German. That said, if the modification is reversible, who’s gonna know?
FAQs About Car Leases
You’ve got questions, The Drive has answers!
Q. Yeah, So Should I Lease a Car?
A. We’ve done it before and our experience was fairly benign. Whether or not you should, however, is something you need to determine yourself. Look through your finances and determine what makes the best sense for you. At the end of the day, you are paying money to temporarily use something, not to own it, so keep that in mind.
Q. Then What Credit Score Do I Need to Lease a Car?
A. Most companies like to see a credit score higher than 700 to lease you a car. However, some will lease you with lower scores. Be sure to read the lease agreement’s fine print to make sure you’re not getting duped by a predatory lender.
Q. Ok, Who Pays For Repairs of a Leased Car?
A. Given that you’re leasing and not buying, you’re likely still well within the manufacturer’s warranty, so you should be covered for normal wear-and-tear maintenance. Apart from tires.
Q. Um, What If I Crash a Leased Car?
A. Your insurance should cover the total cost of the car and pay that sum to you. You’ll then send that sum to the leasing company to pay off the car.
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