Considering leasing a car rather than buying one? Check out these 3 golden rules for car leasing.
1. Always ensure you get the car you need, not want. Because car leasing is a cheaper form of finance (based on monthly payments) that enables people to lease a car that they wouldn’t have been able to purchase, a trap that some people fall in to is to lease a car that isn’t suited to their needs.
Whilst car leasing seems great in some respects, as it could allow you to get a car that you’ve wanted for a long time which has just been out of your financial reach, it’s important to keep things in perspective. Just because something is affordable doesn’t mean that it is practical for your circumstances. You should consider size, fuel efficiency, road tax and insurance before opting for your vehicle. For example, a Range Rover Sport might be only 650 pounds a month, but with a low MPG and high insurance band you need to ensure that you can afford the running costs. Also, don’t forget that there is a monthly car leasing payment and that like other car finance options car leasing ties you into a contract which states you have to pay that figure each month for 24, 36 or 48 months - or even longer.
Furthermore, you also have to take into consideration the additional costs, such as fuel and insurance – you might be able to lease,
2. Be sure to always keep in mind the primary terms and conditions – with any car leasing agreement, there’ll be a whole host of terms and conditions that you have to abide by through the entire length of the leasing agreement. Some of these are particularly obvious but there are various conditions that you have to ensure you always meet. The most prominent of these are your monthly payments – it may sound obvious if you’ve leased a car before or paid for a car via a loan, but it’s extremely important that you never miss a lease payment. Apart from the fact you’re likely to face financial charges, you risk having your car taken off you and damaging your credit record.
However, there are also several other points to consider, such as the amount of miles you drive each year. You need to know upfront how many miles you will drive each year because if you exceed these you will have to pay an excess mileage charge. You can agree this with the finance company at the start of your contract and the proposed monthly payment will be adjusted to reflect this.
3. When shopping for a lease deal you must compare each deal based on comparing like with like. That is, make sure that when comparing a lease deal you are comparing the same term for a lease contract (typically 24, 36 or 48 months), the same mileage and the same upfront payment. Then, look at the monthly price and the total amount paid across the lease contract. This is the only way to compare car leasing deals properly.
One quick tip in relation to your preferred term of your lease agreement, although it can be tempting to choose the shorter term so that you get a new car quicker, this is almost always the most expensive option.