Car leasing is fast gaining popularity as people realize they can lease a new car for far less than they can purchase a second hand car. In fact, car leasing is one of the fastest growing areas of automobile financing. Purchasing even a used car often requires a large down payment. Later one might have difficulty paying the monthly instalments or could be saddled with a car having break-downs or problems.

 

Most people who lease cars do so because they want to drive a better car than they can afford to purchase. If this is your reason for leasing then leasing a new and sporty car could be the best option for you. As long as the lease has reasonable terms and the car is in a good condition there is no reason not to take advantage of the benefits of leasing.

 

Leasing a used car is cheaper than leasing a new car. The benefits and terms of leasing a used car are similar to the benefits and terms of leasing a new car. The negotiation process and contractual obligations are the same. You are paying only for the time you use the car and you are not responsible for the car when the lease ends. Car leasing also allows you to drive a car with low monthly payments for little or no down payment.

 

What to look for when leasing a car?

 

It’s important to research any car you lease. Many leased cars come with warranties. Check carefully to determine if the warranty is a true extended coverage warranty or just the remainder of the car’s original warranty. When considering a car lease, get a list of what’s covered and what isn’t in writing from the leasing company. It’s unadvisable to lease a car without a warranty. Car warranties usually only cover major mechanical breakdowns. Repairs are not covered by a warranty and are your responsibility. Obtain the car’s VIN number and try to trace the cars history through CarFax or a similar company. Have the car inspected by an independent third party to ensure the car is in good condition.

 

Research the market value of the car and negotiate with the dealer for the best price before leasing. Understand the market value of the car before you negotiate your lease. Understand the following leasing terms and how they will affect your lease: money factor, residual value, up-front fees, lease terms and lease-end fees. Thoroughly read the leasing contract and understand your contractual obligations. If you are leasing a new car, you only pay for the depreciation and interest while you possess the car. Since you are not financing the total cost of the car, payments are typically lower than if you purchase.

 

The selling price of a car is important since it helps determine how much you will pay for your lease. The lower the cost of the car the lower the payments. Car lease payments are determined by the difference between the selling price of the car and the car’s expected residual value at the end of the lease. You should negotiate the selling price for a car lease just as you would if you were purchasing a used car. Some cars depreciate faster than others. It’s important to choose a car that depreciates slowly when considering a car lease. Cars with slow depreciation get better leasing rates and terms. When depreciation is low, the car will have a higher residual value which makes monthly payments lower.

 

Reference

http://www2.myautoloan.com/