While many people are currently choosing to lease a vehicle over owning one, quite a few people still don’t fully understand what they’re agreeing to when they sign the dotted line. It is very important for a customer to understand what a car lease is, and discuss the details of their specific agreement with the dealership prior to agreeing to a term and specifics.
Leasing a car is the act of renting a vehicle for a set period of time at a fixed or agreed price, after which the car is returned to the dealer upon expiration of the lease period. It is considered the alternative to physically buying a car. Below we’ve compiled some frequently asked questions that each person considering car leasing versus buying should know.
For how long can I drive a leased vehicle?
There is no straightforward answer to this question because leasing periods differ from one dealer to another. However, the most popular leasing agreements are for a period of six months to five years, including the option to buy upon the expiration of the lease period, if the customer wishes.
What are the conditions and terms for leasing a vehicle?
While the terms and conditions for leasing a vehicle are pretty extensive, one that should not be overlooked, apart from the most important time period agreement, is the speed limit or rate of fuel consumption aspect of the agreement. This implies that the consumer is required to make a security deposit in case of damage to the vehicle resulting from driving over the speed limit. This security deposit is returned to the consumer if the vehicle is in a good state at the end of the lease period, but it is important to be aware of this from the get-go to curtail any potential problems from the start.
Would there be any consequences if I exceed my mileage allowance?
Exceeding your mileage or fuel consumption rate will produce an extra charge based on the amount of miles exceeded. For this reason, car leasing may not be the best option if you are a person who drives many miles on a regular basis. There are various online car lease mileage calculators, which can assist you in predicting any mileage exceeded and the fees you will be charged.
What does a lease vehicle residual value mean?
The predicted value of a leased vehicle at the end of a lease period is considered its residual value. This residual value of your leased car is what determines or decides the monthly payment on your lease since you only pay for the period you use the car.
According to the lease agreement, will I be rewarded for returning my lease car before the expiration of the lease period?
Returning your lease car before the expiration of the lease period may actually have a negative effect on your credit score, and this is because most car dealers see the act as repossession. To this end, several dealers ensure that the lease agreement includes sanctions and fees when your lease car is returned before the lease period is over.
What does the lease agreement say about a wrecked or stolen car?
Every lease agreement stipulates that you will pay the residual value of your lease vehicle in addition to making a complete payment of your incomplete payments in the event the vehicle gets stolen or damaged. The GAP insurance is utilized by several lease vehicles, and this provides the difference between the vehicle’s main cash value and the balance left on your lease.
While there are obvious benefits to purchasing and owning a vehicle, leasing is also a great option! Regardless of what you decide, always research your options and know what exactly you’re signing before you make a final decision.