The Worst Mistakes You Can Make When Leasing A Car |
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Mark Etinger
3 August 2012
Leasing a car can be a great way to get reliable, quality transportation for much less than the cost of owning. But beware, not all car leases are created equal; know the terms before you sign that car lease deal.
1.Too large of a down payment. One of the best and most enticing aspects of leasing a car is not having a down payment. By the same token, one of the biggest reasons to lease new cars is being able to drive a nicer vehicle than one might normally be able to afford. However, if you have to make a substantial down payment, you're negating one of the most appealing aspects of car leasing. If your car dealer insists on a down payment try to negotiate and get it as low as you can. This may mean sacrificing on options and models, but it will get you ahead of the car lease deals game.
2. Not buying enough mileage. Car Lease deals rarely include more than 15,000 miles per year. In fact most new car leases are more around the 12,000 mile mark. That doesn't leave a lot of leeway outside of regular use. Once you start to go over your allotted miles you could be charged as much as 50 cents a mile. This can very easily add up, making your great-deal new car lease a financial nightmare.
3. Not getting the option for a closed-end lease. A closed-end lease is one of the most important parts of car leasing, especially if you intend to keep the car after the lease period is over. In a normal lease, if you want to buy the car you've been paying for, you'll need to start paying all over again at what the dealer considers to be the car's value. With a closed-end lease, the money you've already paid on lease payments can be applied to a pre-determined end of lease value. This is a boon to anybody that wants to own after leasing.
4 Forgetting the value-gap: Your car's value will depreciate, but even if the car is totaled or stolen you may be responsible for the original value of the car. If your insurance company only pays out for the car's book value, then you as a consumer will be held liable for the value difference. Purchasing gap-insurance can help to mitigate this by covering you for the difference in value between the car and your leasing obligation.
5. Not maintaining the car. This is a simple but often overlooked aspect. You dealer may assess some penalties or extra fees for a poorly maintained car. The best way to avoid this is to simply take the best care of the car possible. Make use of the manufacturer's warranty.