Leasing A Car: How Does It Work?
Leasing a car is one of the most popular ways to enjoy all of the amenities that a new vehicle has to offer. Let's also remember that a lease is much cheaper when compared to an outright purchase. Thus, you will be provided with an extra sense of liquidity without placing your financial freedom in jeopardy. It is nonetheless a fact that any type of lease represents a very real commitment. This is why it is a good idea to understand the process itself as well as to appreciate some professional suggestions to keep in mind at all times.
The Different Types of Lease Options
It is important to mention that there are two types of car leases to choose from:
- Open-ended leases
- Closed-end leases
As the name already suggests, an open-ended lease places all of the financial responsibility upon the buyer in regards to the lease-end value and the actual retail value of the vehicle once the period of the lease has expired. In other words, depreciation comes into play. Commercial enterprises such as businesses will often opt for this type of lease due to the fact that the annual mileage allotments are much higher, so the terms and conditions of the lease itself can be met.
Closed-ended leases are the most popular option for the average consumer. The vehicle is simply returned at the end of the lease period. Assuming that the driver has not exceeded the annual mileage limits and that no excessive wear and tear has occurred, he or she will not owe the leasing provider anything. In the event that the retail value of the vehicle has depreciated below initial estimates, the leasing firm bears full responsibility. This is obviously beneficial from the point of view of the average customer.
Top Tips and Tricks to Get the Best Deal
As with any type of financial agreement, always read the fine print. This is particularly the case in regards to any excess fees that you might have to pay if you exceed the annual mileage limit (normally 12,000 miles). Take a look at wear and tear as well, as you might otherwise be responsible for such damaged at the end of the lease period. Determine how much you will be required to pay each month and the type of interest associated with these instalments. While the interest is normally fixed, there are times when the rates are variable. On a final note, take a look at what previous customers have had to say about their personal experiences. Does the dealership in question boast mainly positive reviews or has the majority of feedback been negative? As you might have already guessed, it is best to avoid any firm which does not boast a solid reputation.
The Most Popular Lease Programmes
Closed-ended leases are by far the most popular option available, as you are freed from many of the fiscal responsibility associated with their closed-end alternatives. There may also be times when a higher down payment will result in lower monthly instalments and this has become an increasingly common option due to the sheer amount of competition on the open market. However, still perform a significant amount of research before making a final decision. It is also prudent to compare the services of three different lease providers before speaking with a live representative. Never make a decision without visiting the physical premises and be sure to take the vehicle for a test drive.
The leasing process does not have to be complicated if you understand its mechanics, so feel free to refer back to this article when necessary.