Car leasing can be quite a confusing topic so we’ve put together some facts to give you some more information about the ins and outs of car leasing. The popularity of car leasing has recently increased due to the fact that people are more conscious about their money and are reconsidering the costs of car ownership. The benefit of a lease is that when you buy a car you pay for all the costs of the car and running the car but with a lease you just pay for the time that you use it. You can also opt for a luxury car lease if you want access to premium cars for short periods of time or an electric car lease is you want to be as environmentally friendly as possible.
Mileage limits
When you lease a car, there is usually a set maximum mileage for the lease period. This is just put in place so that dealers can lease cars to people who drive a normal amount rather than someone who might use a car for business/work and therefore need a lot more use out of it. This also ensures that dealers can lease the car for a long time rather than the mileage getting out of control straight away. Most contracts are between 5,000-10,000 miles a year and there will usually be a fee for extra miles that you use.
Leasing Features
When you lease a car you usually have to provide a deposit and then may a payment each month. You will sign a contract for a set amount of time like one month or 12 months. This is quite beneficial as if you continue to lease then you could get a new car very frequently and you will get to try a wide range of cars. The other benefit is if there is a problem with the car then whoever you have a contract with will be responsible for fixing it.
How are lease costs calculated?
To determine what the monthly payment will be for each lease the dealer finds out the depreciation of the vehicle by subtracting the value of the car after your lease term from the current sales price, this is then divided by the lease term. Also added to this will be interest, dealer’s fees and taxes.
Other things to consider:
Payment options: Some dealers give you the option of paying the money up front rather than monthly which will reduce the amount that you have to pay in total as interest won’t be added.
End of lease: how the lease is ended is important to consider. Some offer the option of being able to buy the car. You can also return the car or release.
Mileage: Sometimes there will be an option to have mileage flexibility so if you don’t use all your miles you can get a refund.
Terms: terms can range from 1 month to up to 60 months. A flexible term might be a better option for you.
