Most people flip the switch for car leasing because they want to drive a more advance car model without having to pay the entire cost of the purchase. While leasing a car makes sense, there are a few mistakes that you should avoid when working out your car lease agreement.
- Never Pay too much Money Up Front
Most people leasing cars look to pay the lowest monthly payment. As a result, they end up paying a lot of money in the beginning. This money is used to pay a part of the lease in advance. This can turn into a loss if you are involved in a collision or your car gets stolen. While the insurance company will reimburse the car leasing company, you will not receive a penny. The end result – you lose your money as well as the car. Hence, you shouldn’t be looking to put up more than $2,000 upfront when leasing a car.
- Never forget GAP Insurance
It is indeed a unique experience driving a new car filled with state-of-the-art features. However, the moment you drive off the lot, the value of the vehicle depreciates considerably. This is universal! This holds true for leased new cars as well. If your newly leased car gets stolen, the car insurance company will reimburse you for just the value of the vehicle. This amount may be less than what you owe the leasing company.
So, the difference will come out of your pocket. A GAP insurance will help you cover the difference, so that you don’t pay anything from your pocket. Make sure your lease agreement includes GAP insurance or find another leasing company.
- Calculate the Miles You Drive Carefully
Most car leasing companies have a mileage limit of 12,000 to 15,000 miles annually. If you exceed this limit, the companies will charge anywhere from 18 cents to 25 cents for each additional mile. This can work out to a substantial amount when you return the vehicle at the end of the lease period. If you drive more miles than what is mentioned in the lease agreement, negotiate a higher limit. Just remember the higher the mileage, the higher the monthly payments.
- Always Maintain the Car
If you don’t maintain the leased automobile and the damage is beyond the usual wear and tear, the car leasing company will charge you an additional sum when you turn in your vehicle at the end of the lease agreement. Just make sure you understand what normal wear and tear encompasses, since leasing companies have different definitions for it. Pick up the end of lease condition guidelines from the dealer to be clear.
- Never Lease the Car for very Long
Typically, lease agreements last for two to four years. If you lease longer than this, you will be disseminating out money for maintenance. You should be looking to lease the car for the duration of its warranty period, which is usually three years or 36,000 miles depending on which comes earlier. This is the time when your bumper-to-bumper warranty lapses and you are saddled with paying for maintenance thereafter for anything that goes wrong with the car. If you want to keep the car a longer period of time, you consider obtaining an extended warranty.
Become a prudent lessee by avoiding cash-sapping mistakes and enjoy driving around in the latest, feature-laden and impressive car.