Leasing a car can seem like an excellent alternative to the hassle of purchasing a new car, paying it off, turning it back in, and putting the remaining value towards your next ride. There are a lot of benefits to leasing, but inexperienced lessees could face consequences due to rookie mistakes. Read on to find out what to avoid.
Paying too much money upfront: Many people think that putting a larger down payment towards their lease is the best choice, simply because it lowers their monthly payments. However, leased vehicles are different than purchased vehicles, because if a leased vehicle is stolen or wrecked, the leasing company will get reimbursed by insurance — not you. Avoid paying too much up front to avoid cheating yourself out of money in case of an accident.
Not getting gap insurance: Since leased vehicles lose value just like any other car, it’s important to keep in mind that insurance companies will only cover the current value of a car in the case of theft or an accident. As a result, gap insurance is necessary to cover the difference between what you owed at the beginning of the term and what a company is willing to pay.
Not calculating mileage: Lease contracts typically have mileage restrictions for leased cars in order to control the loss of value over time. However, many lessees fail to keep in mind the amount of miles they driven and end up having to pay overage charges. Pay careful attention to how many miles you are driving, even if it seems insignificant to you.
Poor maintenance: You may feel cheated out of money when performing maintenance on a leased car, since in the long run it’s not yours and you’ll just be turning it back into the dealership. However, a poorly-maintained car could cause you to face extra charges to cover the cost of the damage anyway, so you might as well do regular preventative maintenance to ensure you don’t have to shovel out the big bucks in the end.
Leasing for too long: The average lease contract is roughly three years, which is the same length as the average warranty. However, some lease contracts can go for four or more years. Financial experts recommend that consumers avoid these longer contracts, as the wear and tear of the daily grind could cause the leased vehicle to eventually need more maintenance than you bargained for.
If you need a new ride, leasing a car can be a great option for people who don’t want to undergo the buying process. Armed with the knowledge of what not to do when leasing a vehicle, you’re now ready to start looking into leasing.