While car leasing is not the soundest of decisions on getting a new vehicle, it’s applicable when you have great credit, want a new car in five years or so and you drive short distances. Getting a new car will be costly, and so leasing one is preferable for most people. But understanding the difference between the two is paramount to make things work.
Most, if not all, thinks of car leasing is similar to renting a car. It’s not. There is a ton of difference between the two. When you’re leasing a car, you are financing the vehicle itself. You just don’t do it directly. A car leasing company handles the acquisition of the vehicle for you, then adds in a fee (a kind of interest) on the cost of your usage. So you pay for using the car, but you’re not directly paying for it.
Negotiate the price.
Whatever you do, make sure that you look for chances and opportunities to cut the price of the car itself. You’re paying for the lease of course, but knowing the price of what you’re going to pay is imperative in your decision making. What separates a great deal from a good one at the end of the day, is the total price you’re paying.
Your monthly lease payment is dependent and is always majorly affected by the capitalized cost, so ask for that with your financing company. When you lease a car, you need to know firsthand the basics of how it works, so research about it. Don’t take advice from friends as the absolute truth either because the situation differs from one company to the next.
Understand the power of learning terminologies.
Knowledge is power. So you need to be in the know when it comes to the language that the contract uses. You will encounter a lot of terminologies when you sign the contract, and if you don’t know half of it or all of it for that matter, and just have a vague idea, make sure to ask your financing company to explain them to you.
Better yet, do your research. Capitalized cost is basically how much the vehicle is. This is the price of the car when the financing company bought it. Buyout price means the price you have to pay for the car once you’ve decided to make it your own. It’s entirely different and unincluded in the monthly fees that you will be charged.
Get the car with the best resale value.
When you lease a car, you are undecided if you will want to keep it or not in the next 5 years or so. Most people wanting to lease will have a major life change in the middle of their terms and ultimately will choose to return it. Getting the car with the best resale value decreases the depreciation costs that you’re paying monthly.
If you are getting a small car for a city commute, the 2020 Volkswagen GTI is a prime option. If you’re leasing a luxury sedan, the 2019 Audi A5 is the one to get. For midsize cars, the latest Toyota Camry is a shoo-in, but you can also choose the Mazda Mazda6. The BMW 5-Series is the best one in the luxury midsize category so look out for those.
Know the things that you can’t change.
There are several things that you can’t negotiate when car leasing. The acquisition fee is one of them. While the price is set by the financing company you’re dealing with, it’s usually based on their calculations, and while you can do your own, simply don’t bother. Most companies will stand firm on their acquisition fee.
The best you can do is ask if you can pay it on a monthly basis. Paying it upfront isn’t a great decision, so when you’re leasing, say, the car that you really want and plans to get it after the terms, ask the company if you can divide the acquisition costs by monthly installments.
One of the many things you need to remember when leasing a car is that there are deals year-round for specific vehicles. Most financing companies that lease a car have social media presence so if you want to get the latest news from them, it’s very savvy to include them in your feed. Don’t stress too much about the leasing, but enjoy the process as well!