New Car Leases
Leasing a vehicle is an excellent option for many drivers, but many aren’t aware of what it entails. If you’re thinking of leasing your next vehicle, here’s an overview to help you get acquainted with the process. Be sure leasing is a good fit for your needs by doing the proper research or talking to a trusted dealer.
What Is a Lease?
When you make payments on your leased vehicle, you’re actually paying for the vehicle’s depreciating cost. The vehicle’s value at the end of the lease period is calculated and then split into monthly payments with fees and interest. You would also be paying fees and interest when you purchase a vehicle outright.
Leases are given with end dates. When you reach that end date, you have the option of paying for the remainder of the vehicle’s cost or simply returning it. The driver does not own the leased vehicle, nor any portion of it, unless they decide to buy the vehicle at the end of the lease. The dealership or leasing company will keep the title.
While the leased vehicle is in a driver’s possession, that driver may be required to follow some rules and limitations. For instance, a common rule is that the driver must take the vehicle in for oil changes at prescribed intervals. Failure to follow these rules and limitations set in the leasing contract may result in penalty fees.
What Are the Advantages of Leasing a Car?
There are many advantages to leasing a car. The reason you might choose to lease a vehicle may be different from the next driver’s, but here are some possible benefits to consider.
One of the most attractive advantages of leasing a vehicle is that you can return it when you’re ready for a newer model. Vehicle leasing is a great option for anyone who doesn’t plan on driving their car until it falls apart. A new, well-maintained vehicle may be on the road for well over a decade. In fact, the average life span of a vehicle is nearly 12 years.
Though some drivers appreciate the emotional connection they may form with a vehicle throughout the years, many other drivers want the latest and greatest technology, style, and creature comforts. The world of vehicle manufacturing moves fast — a lot of new and exciting changes to your favorite models can happen in a decade.
Generally speaking, the monthly costs of a lease are lower than those of a loan for a purchased vehicle. In addition to a loan’s higher costs, the average life span of a loan in 2019 was 69 months or 5.75 years. Comparatively, you will pay more during the life of a loan than you will with a lease. Though you’ll own a car at the end of the loan, that car will be worth significantly less once you own it outright. At the end of a lease, you can start another lease for a newer model.
What Do You Need To Get a Lease?
Here are a few tips to keep in mind as you consider whether or not a lease is a good fit for you:
Be sure that you can handle the costs of a lease before you enter into one. You will be able to discuss the financial aspects of your lease with the lease provider during your consultation. You will likely need a decent credit score to be considered for the lease without a cosigner.
You may be required to show proof of income during your meeting with the leasing service, and you may need documentation that shows you’ve been with your employer for a decent amount of time, generally one to two years. You will also need to provide proof of residence.
You will need proof of insurance to obtain a lease. You’ll likely need full coverage insurance to be considered for a lease, but this is something you can discuss with the dealership. You’ll be required to maintain the appropriate level of insurance throughout the life of the lease to avoid penalties.
Similar to purchasing a vehicle, leasing one may also require a down payment before you drive off the lot. Try to put aside some money to cover this upfront cost. The amount you will need to put down largely depends on the vehicle and the dealership you’re leasing from.
How Much You’ll Be Driving
Leases generally have a mileage allotment that dictates how much you can drive in a year. An allotment of 12,000 miles per year is typical. If you think you may need to drive more than that, you may want to discuss your options with your local dealership or consider purchasing a vehicle.
How Do I Find the Best Lease Term?
There are a few things you can do to get a great lease term that works for your situation. After you decide what type of vehicle you want, look into which model holds its value the most. The more value it holds, the less you’ll likely have to pay for depreciation.
If lower payments are important to you, consider leasing a car with a smaller price tag. The less expensive the vehicle, the lower your monthly payments will generally be.
Decide how long you want the vehicle. If you feel uncomfortable with a three-year lease, you may be able to negotiate a shorter one. Don’t be afraid to tell your leasing salesperson what kind of contract you would be most comfortable with. You never know what kind of deals you can get if you simply ask. A good dealership will work with you to get you the lease that works the best for both parties.
When you’re ready to discuss your car leasing options, visit our finance department at Hiley Mazda of Fort Worth. If you think leasing your next Mazda is a good fit for you, our team of experts can discuss your needs to find the best contract and model for your lifestyle.