Car leasing is an ideal way to drive the car that you want, without spending a lot of your hard earned money. People often think that leasing is similar to renting, but this is not the case. Car leasing is different.
Renting a car is more expensive–more so if you rent for a longer period of time. Leasing is similar to financing a car. You pay low monthly rates for the ‘use’ of the car, usually for a period of 24 to 36 months. After the lease term expires, you are given two choices:
1. Buy the car.
2. Return the car.
Of course, this will depend on the conditions stated in your leasing contract. However, this is one of the good things about car leasing. Since you can just return the car at the end of the lease term, you don’t have to think about selling or trading the car for a new model. You do not have equity over the car if you lease (you don’t actually own the car) but imagine the convenience of always driving a new car, instead of buying a used car and wasting money on unnecessary repairs and maintenance.
Here is special buying advice on car leasing, and how you can find a cheap car lease without scouring every lease deal in town.
1. What’s your credit?
Have you paid attention to your credit score lately? How are you doing in terms of paying debt? Remember that a large majority of new car lease deals are offered with certain qualifications in mind. One of them is for you to have a good credit score (average at the very least).
Do you have bad credit? Not a problem. Car dealers also offer bad credit lease deals on new cars, but you should be prepared to make a larger down payment. Certain conditions will apply, but it is still possible to lease a car even if you currently suffer from a low credit score.
To sum it up, if you want to get the lowest rates and the lowest lease prices–as well as take advantage of the best lease deals in town–you should try to build up your credit and get a good or average score.
2. How’s your savings?
Do you save money in the bank? If so, then now is a good time to withdraw some of your savings and spend it on the down payment of your new car lease. There are available $0 down lease offers on certain new car models, but it is still best to offer a marginal down payment in order to get the lowest lease price.
Your down payment will serve two things:
1. The down payment will be deducted from the negotiated selling price or lease price of the car, hence effectively reducing your monthly lease payments; and
2. The down payment will serve as a ‘sign of good faith‘ among car dealers and lenders, hence giving you the opportunity to enjoy low interest rates (money factor rates). The bigger the down payment, the lower the interest rate.
We will talk more about getting a cheap car lease in the next post.