Smart Tips for New Car Leasing

Smart Tips for New Car Leasing
  • Opening Intro -

    If you are in the market for a new car, leasing is an attractive and surprisingly affordable way to get behind the wheel of a vehicle.

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While traditional financing is the way that many consumers go, you can enjoy the benefits of car leasing and drive off in a nicely appointed new car today.

Leasing Contracts

Just as you would when buying a car and financing it, you will sign a contract when leasing. Review your leasing contract carefully before singing it. Some contracts require you to make payments for several months before you can purchase a new vehicle. You may decide after a few months that you don’t like a car and decide to trade up. If that is the case, expect to hold onto it for some time before making a new purchase.

Leasing Language

Leasing contracts contain terms that may be new to you. You’ll find that “residual value” is mentioned throughout your lease contract and this term describes the value of your car after the lease ends. Also known as the selling price, many contracts allow you to buy your vehicle for that amount at lease end.

If you find that your car’s true market value is lower than the residual value, you may be able to convince the leasing company to accept a lower price. You may have to show documentation that the price is lower, although that information is just as easily available to the leasing company through trusted and reliable websites.

Lease Buyout

You can buy out your lease, with most contracts enabling you to make that decision at the end of lease term. However, if you decide you want to buy your vehicle before the end of lease term, you can typically ask to buy out the car.

But, consider this: the buy out amount may be inflated as the leasing company seeks to recoup its costs. It might prove more cost effective to wait until the end of the lease term before proceeding. In addition, there may be early exit fees that you will be asked to pay. Of course, such fees can sometimes be negotiated away.

Priced Right

We already looked at residual value and true market value. What you need to do is compare the residual value with its current value and plan accordingly.

If you do not buy your car, your leasing company will most likely sell it to a dealer or to an auction house. These parties won’t pay full price for the car, therefore you may be able to win a lower price. One way to do this is to call an auction house and describe your car. Ask for an estimated price, an amount that will likely fall below its true market value. Add $100 to $200 to that price and offer that amount to your leasing company.

Leasing Notes

Always ensure that your rights as a consumer are protected when signing a lease contract. Quite easily it is easy to get caught up in the heat of the new car negotiating moment, forgetting that you will be making lease payments for 24, 36 or more months. Understand what you are getting into and plan accordingly.

Finally, ask your attorney to review your contract if you are uncertain about some of the language present. He may advise you on some of the finer points, including dropping the turn in fee that some leasing companies charge at the end of the lease term.

References
Federal Trade Commission: Understanding Vehicle Financing
LeaseGuide.com: Negotiating a Car Lease — How and When to Negotiate Your Car Lease Deal

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Categories: Autos Express, Featured

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