Leasing a car can be a fantastic alternative to ownership. With simple monthly payments, leasing allows you to afford a high quality and brand new car for the duration of the contract. However, leasing isn’t necessarily right for everyone so it is important to do your research before you commit. Here we look at six things that you need to know before you lease a car.
- The (possibly) hidden costs
Many people worry that if they lease a car they will be hit with a number of hidden costs at the end of contract. It should be noted that if you choose a reputable leasing company that this will not happen, however, there are some elements of the contract that can seem like hidden costs if you are not aware of them.
At the start of the lease contract you are required to state how many miles you are going to drive through the duration of the contract. For example, you might state that you will drive 10,000 miles per year over the course of three years, for a total of 30,000 miles. However, if you then drive 40,000 miles over the course of the contact because you underestimated the amount of driving you would need to do, you will have to pay a fee. This fee increases on the amount of miles you drive over your stated expectations.
This isn’t a hidden cost, but it can take some leasers by surprise if they aren’t aware that this is the system in place.
- For more than just business
A commonly held myth about car leasing is that it is only something that businesses do. While it is true that car leasing is very popular for businesses purposes, it is now becoming increasingly popular for personal use. In fact many drivers who have only ever bought cars in the past are beginning to see the huge range of benefits of leasing.
- Some leasehold cars can be taken abroad
Another worry for drivers thinking of leasing a car for the first time is that they believe that they won’t have the same freedom to do what they like what a leased car, as opposed to a car that they own outright. In some senses this is true, but you actually have far more freedom that you might think.
For example, it the case that the majority of leasehold cars can be taken abroad if you want to drive for business or leisure. It is generally necessary to gain permission to do so from the company financing the lease, however.
- Understanding depreciation
Depreciation is something that anyone who buys a car has to worry about. This is the price difference between the amount it costs you to buy a car and the value it has when you come to sell it. Cars, unfortunately, tend to depreciate very quickly. For example, a brand new car will lose around 40 per cent of its value in one year.
Thankfully with leasing you do not have to worry about depreciation as you won’t need to think about selling the car after it has been returned.
- Don’t modify
It is important to note that leasers are not typically allowed to make any kind of modifications to their car. And in fact in many cases, doing so with incur a significant penalty. If you believe you are going to have specific needs from your leased car then make sure you speak to the leasing company before you commit to the contract, as they may be able to make suggestions for a solution.
- Have a plan for the end of the lease
If you are new to leasing cars then it can be easy to start the process of leasing without having a plan in place for what happens at the end of the agreement. Ultimately if you are going to need another vehicle then you need to plan for it. Leasing has a huge range of benefits and can allow you to have a much nicer and newer car for far less money.
Many leasers like to move from one lease to another to ensure they are always driving a new car. No matter what you choose to do, it is important for you to have that plan in place.