Leasing a Vehicle: 6 questions to ask yourself
You’ve done the research, looked at different types of cars, and decided you want a brand-new vehicle. Now your two main options are whether to buy or lease. The right answer (for you) depends on many factors, including your driving habits, budget, and more.
First, you should understand a few things about leasing:
What exactly does it mean to lease a vehicle?
Leasing a vehicle is similar to renting, with a few primary differences. When you lease a vehicle, you’ll agree upon having possession of the vehicle for a certain length of time. The lease will also specify how many miles you can drive each year each year; if you go over this amount, you’ll be charged per mile.
What is a lease residual?
The residual value is the estimated value of the leased vehicle at the end of the leasing period – or in a nutshell, an educated guess. The longer the leasing period, the lower the residual value.
A residual takes into consideration the expected depreciation of a vehicle’s value over the life of the lease and is based on things like the make and model of the vehicle, the vehicle model’s resale history, the expected annual mileage, etc.
Is there only one type of lease?
No, there are two main types of leases – open-end and closed-end:
Closed-end – This type of lease allows you to return a car at the end of the lease period and decide to walk away or purchase the car. If you walk away, you’ll still be responsible for end-of-lease charges like mileage and wear and tear. If you decide to purchase the car, the purchase amount is based on the residual value of the car (determined at lease signing), plus a processing fee.
Open-end – This type of lease is normally used for commercial business because the market value of the car is determined at the end of the lease period. That value is then compared to the residual value and you’re expected to pay the difference, which can be quite large.
What if I need to break the lease?
No one can predict the future. Perhaps you lose your job, or your financial situation changes and you can’t afford the lease payments. Luckily when leasing a vehicle, you still have some options:
- Sell the car – Call your bank or financing company and find out what the current buyout amount is. Then, check out Kelley Blue Book or Edmunds to find the True Market Value of the car by considering mileage, options, your region, and more. If the TMV is relatively close to the buyout amount, consider selling the car yourself. Even losing a bit of money on the sale is better than walking away – doing that is considered a “repo” and it will negatively affect your credit.
- Find someone to take over the lease – Check with your leasing company to see if they allow “assumptions.” Some companies allow you to find someone to take over the lease so you can be relieved of monthly payments – and all it will cost you is a small fee to do the assumption.
When deciding whether to lease or buy a vehicle, as yourself the following two questions:
Do I expect to drive a lot this year?
One of the main ways to keep the payments down on a lease is to keep the mileage to a minimum as well. The limit will be specified in the lease contract, but is usually around 15,000 miles. As stated above, if you go over the mileage, you’ll be charged for it. So, if you’re a person who has a long commute or likes to take frequent road trips, owning a vehicle may be the better option for you.
Do I crave a new vehicle every few years?
If you’re the type of person who gets tired of your vehicle and often wants something new, a lease may be the best option for you. You’ll be able to trade the vehicle in for a new one every two to three years (as long as you follow the terms of the contract), and will always be driving a fairly new car with the latest features and technology.
Next time you’re in the market for a new car, as yourself these questions. Doing it now, before making a final decision, can help save you time and money in the long run.
About the Author
Don Robinson has written extensively on the new car market. Finding the right Texas Ford Dealers and 2011 Ford Mustangs in Texas is important for a successful outcome.
Tesla Model S Premier in Menlo Park [Clean Power Show]
|
|
Koolatron Compact Kooler $79.99 Coolers are usually large and unwieldy, which is why Koolatron developed the Compact Kooler, specially designed to fit in the snug spaces behind the seats of many cars, trucks, and vans. Like many of Koolatron’s coolers, this unit features a 12-volt cooling system that plugs into a car’s cigarette lighter. The cooler’s motor blows cold air over your food and beverages, keeping them 40 degrees F co… |
|
|
Culligan RV-600A Level 1 Recreational Vehicle External Water Filter (Includes 12-Inch Hose and Fittings) $16.67 Convenient and easy to use, the Culligan® RV-600A Recreational Vehicle Drinking Water Filter with Hose produces cleaner, better-tasting drinking and cooking water while you are on the move. The RV-600A disposable granular activated carbon filter reduces bad taste & odor, aesthetic chlorine taste & odor, and sediment. The Culligan® RV-600A comes with a hose and provides a high flow rate for qui… |
|
|
Wagan EL2577 7 Liter Personal Fridge and Warmer $54.95 Transporting food in your vehicle is a tricky business, especially on a longer trip. A cooler will eventually warm up and hot foods usually cool down, which can pose food safety issues. Why take chances when you can have this handy personal fridge and warmer. It features a 7-liter capacity and can hold up to 11 cans of your favorite beverage or other foods requiring refrigeration at a safe 35-40de… |
|
|
Dune 2000 Dune 2000 is a real-time strategy game that requires gallant leadership, cunning tactics, and formidable military prowess to win the Emperor’s challenge by being the first to harvest the most spice and take control of Dune. Three houses have arrived to claim the prize: the honorable House Atreides, the insidious House Ordos, and the vicious House Harkonnen. Whichever house you choose to lead, reme… |
|
|
MonoKote Covering Instructional Video VHS $9.96 This is a MonoKote Covering Video from Top Flite. / / FEATURES: This Video is an Excellent Tool of Learning How To Cover a / Radio-Controlled Airplane from Start to Finish. / It is Packed with Great Tips and Ideas for the Novice or Expert / Modeler. / Features the Full Line of Top Flite Tools and Accessories. / Includes Coded Steps On Video for Easily Finding Specific Sections / for Review. / / … |
|
|
Accutire MS-4021B Standard Digital Tire Gauge $9.95 Reads 5-150 PSI in 1/2-lb. units. Backlit display. Rubberized handle. Auto on/off. Lifetime lithium battery. Max. PSI: 150… |
|
|
Kidde FA110 Multi Purpose Fire Extinguisher 1A10BC $21.45 466142 – MULTI-PURP.EXTINGUISHR.1A10BC – For every home or office Disposable Ready to fight small fires before they spread, strap bracket, gauge for easy pressure check … |
|
|
Black & Decker PAV1200W 12-Volt Cyclonic-Action Automotive Pivoting-Nose Handheld Vacuum Cleaner $39.97 Includes 12V Automotive Pivot Vac – PAV1200W, 16-ft Power Cord, Filter, Crevice Tool, Upholstery Brush, Hose, Soft Bag… |
|
|
Gold Peak – 23A Alkaline Batteries – 5 Pack $0.01 The shape and aspect ratio of the A23 battery are similar to those of a common AA battery. However, an A23 battery is much smaller than even an AAA battery, measuring only 29 mm long and about 10 mm in diameter, with a typical weight of 8 grams. An A23 battery is a dry cell-type battery mainly used in small electronic key fob devices, such as keyless vehicle entry systems, home security systems, a… |
|
|
BISSELL Auto Care ProHeat Compact Multi-Purpose Deep Cleaner, 14254 $89.99 Designed to remove dirt and stains in your car with strong spray and suction Built-in heater heats tap water up to 25 degrees hotter Includes crevice tool for hard-to-reach areas 3 inch stain tool helps you scrub stains away Sprays and suctions to dry in one step 48 oz dirty tank capacity The advantages of a built-in heater The AutoCare ProHeat portable deep cleaner has a built-in water heater th… |