Drivers are frequently confused about the finances of leasing a car. Although leasing is nothing new, people who have never done it before may be confused. There really is a lot to it, and it’s different from paying a bulk amount for your new or used car that you plan to have for years. Leasing gives you the chance to try out various cars without commitment, and it’s worth trying out at least once throughout your driving days. Below we’ve explained how the financing works. We have gone in-depth into general leasing information, down payments and other payments. There is a lot to know before you make the decision! Keep reading to learn all about how the finances of leasing work!
General Leasing Information:
If you are interested in driving new cars, then leasing is a way to do it. You may get yourself a new car every few years if being in the most technologically-advanced vehicle is important to you. Depending on your lease, you might only be allowed to drive the car a certain number of miles each year. This may be a good thing, because you are saving on gas money, too. Keep in mind that if you exceed your mileage limit, you will likely have to pay a penalty.
Leases involve down payments. If you make a large down payment, then you will have small monthly payments. Be prepared to pay a fee as a penalty if you choose to turn in the car early, before your lease term ends. However, the fee can be waived if you are trading in the car for another leased vehicle or if you are buying a car. You may also have costs that include an acquisition fee, a refundable security deposit and a first month’s payment. These payments have low interest rates. Essentially, it’s important to figure out how much you can afford with this leasing, like you would if you were actually buying a car.
Lease payments are generally low, as you are paying only for the vehicle’s depreciation throughout the lease term. Depreciation ties into the car’s residual value, which is a percentage that is an important part of the leasing deal. If you’ve got a high residual percentage, then you will likely have low monthly payments. You will also be paying for taxes, and ‘rent’ charges. When your lease term concludes, you may have some end-of-lease costs. Any of the vehicle’s future value will have no monetary impact on you. If you exceed normal vehicle wear and tear, then you will be responsible for those charges.
We recommend that no matter your reason for leasing, that you read the fine print on your contract to ensure that you don’t violate them. We hope that you have liked learning about the finances of leasing vehicles. Thank you to Humes, a Dodge dealer in Waterford, PA, for help with this article! Don’t hesitate to contact them with specific questions about a vehicle you may like to lease!