Leasing a car looks similar to renting a vehicle, but for a longer term. Typically, you need to make an upfront payment to get started. Plus, you will have to make monthly payments over a specified time. Once the car lease is over, you can decide whether to start a new lease or purchase the vehicle outright. In this article, you will find answers to questions, such as, how does a lease work, what are the benefits to car leasing in NJ, and how can I lease a car?
With 30% of new vehicles being leased in the United States, it’s time to consider this cost-saving option.
What is a Car Lease?
Before diving deeper into – how does a lease work, we must understand what it is. The car lease is a legally binding agreement between a person who wants to borrow a car and the company that owns it. When you lease a vehicle, you pay a monthly fee, similar to when you finance a car. However, this payment is often lower than financing a comparable model.
In the car lease agreement, you will find several aspects:
• Lease length – the term of the lease (typically two to four years)
• Value of car now
• Value of the car at the end of the lease
• Lease fees
• Money factor – this is the rent charge, similar to the interest rate found on an automobile loan
• Termination fees – if you choose to end the agreement early
• Miles permitted
• Definition of normal wear and tear
Some of the rules laid out in the agreement might seem restrictive, but you must remember that this isn’t your vehicle. You are basically renting it for a time period, and the owner wants to ensure it will come back in good condition.
Benefits of Leasing a Vehicle
There are many reasons that car leasing online is appealing:
• Payments are cheaper than comparable finance agreements
• Requires a lower down payment than purchasing a similar vehicle
• You can afford to drive a new car with the latest technology
• In a couple of years, you can upgrade to another new vehicle
• You never have to worry about selling the vehicle
• It’s always covered by the manufacturer’s warranty
Disadvantages of Leasing a Vehicle
There are some reasons that you might not be ready to lease a car. Here are some of the drawbacks to consider:
• Additional fees
• Possible penalties
• It can be challenging to get out of the agreement unless you do a lease transfer
• Cannot customize the vehicle
• No equity in the car
How Does a Lease Work – Is It Right For You?
After looking at the benefits and potential downfalls, it’s time to decide if you are ready to lease a car. In some circumstances, it makes a lot of sense to start a lease. Consider this option if you:
• Are short on cash, but need a vehicle
• Want to drive a model that would typically be out of your price range
• Won’t exceed the mileage restrictions
• Can take care of the car during the lease period
• Plan to lease a new car after the contract expires
If you lease a car, you will have to abide by the mileage agreement. Typically, this falls between 10,000 and 15,000 miles a year. If you go over the mileage limits, you can expect to pay between 10 and 15 cents for each additional mile. For this reason, car leasing online isn’t always a good option for someone that has a long commute.
How to Lease a Car
Now that we’ve covered how a lease works, it’s time to look at getting started. If you are ready to sign a car lease, here are some steps to take:
• Choose a vehicle type – Are you looking for an SUV, convertible or executive sedan? Determine what type of car you need.
• Pick several models – Choose models that fit your price range. Make sure you look into the safety features, dependability rating, gas mileage and insurance premiums upfront.
• Schedule a test drive – Drive the top models to determine which one fits your needs the best. Examine the comfort levels, visibility and advanced features included.
• Compare lease options – Get details about the lease on every model you prefer. Compare these and determine which is going to give you the best value.
• Get payment details – Once you figure out which lease fits your budget, make sure you understand all of the costs involved. Ask about fees, down payment and penalties.
• Drive Away – Sign the paperwork and drive away in your new vehicle.
How Does a Lease Work – Avoiding Penalties
As with any financial agreement, there are penalties if you go against some of the terms. You don’t want to pay more than necessary to lease an automobile, so here are some tips to avoid those lease penalties.
Excess Mileage Charges
You will agree to keep the car under a specified mileage. Your lease payments are calculated on residual value, which relies on the vehicle coming back with less than a certain mileage. If you go over this agreed amount, you will pay per mile.
To avoid this, calculate how many miles you drive your car in a year. Be sure to allow for some extras, such as vacation or business trips. If this amount isn’t going to fall far below your agreed amount, it might not pay for you to start a car lease in NJ.
If you want to get out of the lease, you will have early termination fees. These can often be costly. To avoid this, consider doing a car lease transfer instead. By simply finding someone to take over the current lease, you can avoid unnecessary fees.
Wear and Tear
The car must come back in good condition, or you will be charged for wear and tear. Again, the owner based your payments on a certain residual value. If the vehicle needs work when it returns, that value decreases. To avoid these penalties, keep your car in good condition. If something breaks, have it fixed immediately.
Car Leases in NJ & NY Done Right
How does a lease work? If you have more questions, we are here to help!
The Vantage Auto Group provides reliable car leasing options in both New Jersey and New York. On our website (https://www.thevantagegroupauto.com/), you can access an entire inventory of marked down vehicles that fit your lifestyle and your budget.
We also provide a selection of luxury cars at rock-bottom prices. These typically come from unions and corporations that can offer larger discounts. Our professional staff is ready to help find a vehicle to fit your tight budget or find financing solutions that fit your poor credit score. Give us a call at (844)-307-3885 to speak with a live agent, or feel free to email us with any questions.