Leasing a car is a great option for many, especially if you like to change cars frequently. However, the numerous terms and fees can quickly become a nightmare to understand. Here you’ll learn five essential things to know before leasing a car to make sure you don’t get burned.
What You’re Paying For
When you lease, you’re essentially paying for the amount of depreciation for the vehicle over the course of the agreement. In particular, the residual value listed on your paperwork will be a major factor in how much you pay each month. The lower the number, the higher your payments will be. The actual value of the car if it were purchased also factors into the payments as well, so your best bet is to look for a lower sales price and higher residual value.
Make Sure to Compare
All leasing companies have a variety of fees and incentives that are applied to a lease. Take the time to compare a few different dealers before you sign a contract. This will help make sure you get the best deal overall. You’ll also discover that some offer no down payments while others require high ones for the same vehicle, so you could save considerably.
A Word on Down Payments
When a dealer offers no down-payment leases, you should always pay attention. While it might make your payments a bit higher, you’ll also have the benefit of saving all that money if you happen to get in an accident soon after the lease starts. You can always use what you wanted to pay for a down payment to pay your first few monthly charges.
Keep the Terms to a Minimum
While it may be tempting to opt for a four or five-year lease term, your best option is to go for no more than three. This will make sure the vehicle is covered under the manufacturer warranty in most cases, which could save you a lot on repairs. You also have to consider that a longer lease simply means more money you are paying out towards a vehicle you never plan to own.
One of the most important considerations when leasing a car is the number of allowed miles. Many only offer 12,000, which means if you surpass that, you’ll be charged an additional fee per mile you travel. Be honest when determining how much you drive each year to avoid exorbitant additional charges at the end of the lease.
If you’re leasing a vehicle, consider YourMechanic for the repairs and maintenance that aren’t covered under the lease agreement.
This article originally appeared on YourMechanic.com as 5 Essential Things to Know Before Leasing a Car and was authored by Valerie Johnston.