When shopping for a new vehicle, you have a choice of purchasing or leasing. With a purchase, you’ll typically make a down payment and follow with monthly loan payments until the vehicle is paid off. With leasing, you’ll have certain upfront and lease-end costs, make monthly payments, then return the vehicle once the lease term ends. By leasing, customers can get behind the wheel of a new vehicle every two or three years.
Leasing certainly isn’t renting and the commitment period requires lessees to hold on to their vehicles until the lease terminates. Yes, you may be able to find someone to take over your lease, but there is usually a cost involved and the process isn’t easy.
Still, leasing appeals to some. For this reason, we’ll explore how to lease your next vehicle.
7 Steps to Leasing
We’ll examine the seven steps necessary to lease a vehicle. The third step is pivotal, particularly with acquainting yourself with it.
Step No. 1: Check your credit score
Most consumer decision involving loan payments and leasing is based on your credit score. If you haven’t checked it for some time, it is important to do so now. A score of at least 660 is important. If your score is at least 700 you are in a better position to be eligible for a lease agreement based on competitive terms.
Step No. 2: Know what you want
Shop for the type of vehicle you want. Just as with any new vehicle decision, you’ll want a make and model that suits your needs. Consider trim grade levels, special amenities, and packages that suit your needs. Then, shop accordingly.
Step No. 3: Hit the road
You’ll be driving your leased vehicle for two or three years, perhaps longer. Take advantage of the test drive and spend time with the vehicle. Get a feel for the seats. How the ignition engages, the engine and transmission behavior, and the ride. Fiddle with the in-cabin technologies and understand the driver-assist tech. Likely, you’ll have a decent sense of the vehicle and how it is. If you are satisfied with it, then continue with the purchase process.
Step No. 4: Price isn’t everything
When purchasing a new vehicle, the sticker price (MSRP) is just that. A price. Unlike most consumer items, it is a suggested retail price. Here, you’ll want to negotiate the best deal possible as your lease payments will align with the cost of the vehicle.
Step No. 5: Look around
Dealerships offer lease agreements based largely on what manufacturers offer consumers with top credit. Even so, the lease offers may vary somewhat depending on the trim grade and other features. If one dealer doesn’t have the model you want, another may. Don’t settle for any vehicle simply because it is available. Remember, you’ll have to live with the vehicle for several years. Also, you cannot make modifications to it as you would with the one you’re purchasing.
Step No. 6: Know the bottom line
What are your total costs when leasing? You need to know how much upfront money is required. Also, there are mileage limits with penalties for exceeding mileage thresholds. At lease end, there is a disposition fee. Finally, understand what your monthly costs are when leasing. Add these costs together and the low monthly payments may not be so wonderful after all.
Step No. 7: Let’s make a deal
Once you’re satisfied with the vehicle and the lease agreement, you’re ready to close the deal. There are a few things to keep in mind, though, including ending early costs, wear and tear fees, and insurance. Speaking of insurance, make sure that either the leasing company or your insurer has GAP coverage in place. The guaranteed asset protection (GAP) will ensure that the vehicle is covered in the event of a total loss.
Leasing is an option commonly embraced by businesses, but available to consumers. Perform due diligence to fully understand the terms as well as your multi-year commitment to the vehicle.
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