If you’re looking for a car and you don’t want to go through the hassle that’s associated with purchasing an old or new car, then you may want to consider leasing. Leasing is where you rent a brand-new car, pay an agreed monthly sum, and return the vehicle after the leasing period is complete.
While some people may advise against leasing a car, it can be a great way to access a brand-new vehicle without having to pay the full price. Also, a new car has obvious advantages. Other than being a great complement for certain lifestyles, new cars generally don’t have significant maintenance or repair issues, which means you can get on the road confidently, because you know that the vehicle will perform as expected.
That said, leasing a car also comes with its fair share of risks. It’s important to learn how to recognize these risks so you can avoid a world of headaches in the future. Here are a few mistakes to avoid when leasing a car:
Understating The Terms Of The Lease
There are plenty of people who go into a contract without fully reading through the terms. A crucial consideration you should always take note of is the type of lease agreement and whether it’s open ended or-closed contract. An open-ended contract requires the lessee (you) to make a final payment in purchase of the vehicle. On the other hand, there are no final obligation imposed in the lessee with a closed contract.
If you signed on an open-ended contract then you have no option but to purchase the vehicle. Choose a dealership that’s transparent about the terms of the contract. There are platforms online that can help you with this. For instance, you can get the best car lease deals with Rodo, since they offer access to thousands of dealerships to enable you to make an informed decision.
Underplaying Your Mileage
When leasing a new car, it’s crucial that you come up with a good estimate of the total number of miles that you drive each year. This allows you to get the best monthly charges. Many people however, are looking to get a low price and therefore underestimate their mileage.
The downside of this is that when the lease agreement is complete and its finally time to return the vehicle, you’ll have likely driven over your estimated mileage which means you’ll need to pay extra for each mile you drove over the mileage. This can end up costing a lot more cash than you’d have paid if you simply gave the correct mileage during the signing of the contract.
Not Having Gap Insurance
Many people will enter into a car lease without signing up for gap insurance. They will thus end up paying for the value of the depreciation of the vehicle for the period that they have the vehicle. Although it’s common sense to have car insurance when taking a lease, this may not cover the value of the depreciation when you’re returning the car.
The depreciation ends up being a loss for the leasing company, which they will then pass on to you. With gap insurance you don’t have to worry as you will be covered for the value of the depreciation meaning that you’re only on the hook for the monthly fees.
Leasing For Longer Than Three Years
When leasing a new car, it’s advisable to never lease for more than 3 years. Remember that the main reason you choose to lease a new car is so you can avoid the service and maintenance costs that come with driving your own vehicle. When you lease for more than 3 years there is all likelihood that the vehicle will require regular maintenance. This means that you will end up paying more than just the leasing charges.
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Not Negotiating
While many people who lease vehicle may not understand this, the prices on lease agreements can be negotiated. Even a small reduction in the price can end up saving you a lot of money during the period of the lease so be sure to negotiate the costs. Furthermore, try to push down the cost as much as you can. You’d be surprised at just how much you can influence the final charges.
Final Thoughts
Knowing the top 5 mistakes most lessees make can help ensure that your lease works to your benefit as much as it does for the leasing company. Remember not to take a lease for longer than 3 years to keep the costs down and also be sure to negotiate the prices. Furthermore, don’t forget to read through the contract before putting your signature to avoid any problems down the road.