If it's time to replace your current car, it's a good idea to consider all of your purchase options, and car leasing is an option you should definitely consider.
A lease allows you to drive off the lot in a brand new car without having to make a big down payment (typically 20 percent for a car loan) or take out a car loan at all. As an added bonus, leasing allows you to drive a new car under warranty, which usually doesn't require any major repairs.
Rental costs also tend to be lower, so you can afford a more luxurious car and a higher level of decor.
Although renting has many advantages, it also has disadvantages, it is not for everyone. Understanding the leasing process and the pros and cons is key to a successful car rental.
Here are the steps in detail about leasing a new car and all the pitfalls you should be aware of before signing.
Determine if the lease is right for you. Understanding the leasing process is key to making the right decisions.
First, it's important to understand the basics of leasing:
In most cases, a small down payment is required. Dealers often refer to this as an "expiration signature" number. That number can range from zero to several thousand dollars, depending on the vehicle you're renting.
The term of the lease -- the number of months you have to pay for the lease -- ranges from 12 to 48 months. The most common maturities are 24 and 36 months.
When the lease term ends, you simply return the vehicle to the dealer or leasing company. If you decide to keep the car, you can also buy it.
Set a budget. Once you've decided that you really want to rent your next car, you need to set your budget.
Do this before you start looking at vehicles. Take a careful, long-term, and very realistic look at your finances and determine how much you can afford to pay each month for rent and down payment.
Consider the lease terms. While a longer lease will lower your monthly payment, most experts recommend limiting leases to 36 months. In this way, the vehicle is under warranty for the entire lease term.
Determine your mileage limit. Standard rentals typically set a mileage limit of 12,000 miles per year. You could raise the mileage limit, but that would increase your monthly payment. Realistically, over mileage can be expensive.
Consider the insurance premium. Don't forget to factor the insurance quote into your budget. Leasing requires that the vehicle be fully insured at all times.