If you need a car but don’t want to deal with the trouble and expense of a car loan, leasing could be a good option. However, car leasing isn’t free of complication. While the process is more straightforward and simple than car ownership, it still comes with a fair share of pitfalls if you’re not careful or neglect to read the fine print. If done right, leasing a car could save you money, boost your credit score, and give you access to a brand new car at a reasonable price. However, one misstep could lead to costly consequences. If you’re in the market for a new vehicle, here are some car leasing tips to take into account.
1. Don’t Put Too Much Money Down
When you buy a car, you usually have to put something down upfront. While this might be an unpleasant task if you’re short on cash, at least you have the benefit of knowing that it’s going toward your ultimate ownership of your car. The more you put down, the less you’ll have to pay in interest through the years. However, when you’re leasing a car, there isn’t much point to putting down a ton of cash. You’re renting, which means your money isn’t much more than a deposit. However, should something happen, like theft or an accident, you won’t be getting that money back in the end.
2. Get Gap Insurance
Speaking of owing money, it’s important not just to rely on regular insurance while driving a leased vehicle. While you’ll be covered against accidents by your normal insurance, it will still put you at risk with the owners of the car. Gap insurance refers to the amount of money you owe on the total lease, which means you’re protected from being on the hook for damages should anything happen.
3. Check the Mileage Limit
Since leasing isn’t ownership, you might be surprised by how affordable the terms are for a new car. But don’t make the mistake of forgetting to read the fine print. Many dealerships have a mileage limit, after which you’ll be charged more for driving the vehicle. This is because lease agreements aren’t meant for people who drive a lot. Always make sure you ask about mileage to avoid ending up in danger.
4. Keep Your Car Protected
Since you don’t own your car outright, it’s in your best interest to keep it clean, scrape-free, and out of trouble. Even the slightest dent could result in you owing money at the end of your lease term.
5. Choose the Right Lease Term
When you agree to lease a car, you’ll usually choose a time period from two to four years. After this time, you can potentially buy the car or get a new lease agreement. Whatever you choose, don’t make the mistake of leasing your car for too long. This could result in your paying way more just to rent a car that’s drastically devalued over the years. If you want to play it safe, don’t go over four years on your agreement.