How To Lease a Car: 7 Steps To Get the Best Deal
A car lease allows you to drive a new car without having to buy one. If you’ve ever dreamed of driving the latest model of your favorite car, an auto lease might be right for you. Leasing is just another way of financing a car, and it’s becoming increasingly popular.
To lease a car, you only need to make a down payment followed by affordable monthly payments for the entire term of the lease. Leasing a car can be convenient for you if you aren’t staying in the same city for more than a couple of years.
However, you should undertake this initial part of the process as if you were buying a car outright. After all, the choices you make will affect your budget and finances, at least for a few years to come. If the idea of leasing a car appeals to you, here’s how to get the best car lease deal in the process.
How a Car Lease Works
Leasing a car is more than just a down payment and monthly payments. Your lease agreement may include stipulations, such as:
- Lease term: This is the length of the lease.
- Gap insurance: This is the amount you pay to the leasing company if the car is totaled or stolen.
- Disposition fees: This a fee charged at the end of the lease to cover the cost of reselling the car.
- Security deposit: This is the amount used to cover damage or extra mileage charges when you return the car.
- Mileage allowance: This is the number of miles you’re allowed to drive per year or over the entire term of the lease.
- Buyout price: If you decide to buy the car outright at the end of the lease, the amount you pay is the buyout price.
How To Lease a Car
Finding the best way to lease a car can be confusing, even if you’re a veteran car buyer. But don’t fret. Here are the steps to help you snag the best car deal and drive the vehicle of your dreams.
1. Select a Vehicle That Retains Value
When you lease a car, you’re paying for its depreciation, which may vary depending on how long your lease term is, your annual mileage and the car model. Simply put, if you choose a car that holds value, it depreciates less — in the long run, you’re cutting down the cost of your lease.
If you want the best deal, choose a manufacturer and a model renowned for holding value. This holds true for longer contracts because the car will have a good resale value at the end of the lease term. Lessors estimate the residual value at the time the lease contract is written.
2. Mind Your Mileage
Every car lease contract states the maximum number of miles you can drive the vehicle per year. Usually, these annual mileage allowances range from 12,000 to 15,000. An additional fee per mile may apply if you exceed the agreed-upon mileage.
To avoid incurring additional charges, be honest with how many miles you plan to drive per year. If you intend to drive more than the lease mandates, consider asking for additional mileage. On the other hand, if you know you won’t need more mileage or you’ll be driving less, try negotiating a lower monthly payment by reducing the mileage.
3. Look For Leasing Specials
From time to time, manufacturers might advertise special leasing offers for cars that aren’t selling as fast as others. Typically a lease special will advertise a reduction in down payment or lower monthly payments. It’s certainly worth checking out such offers, but don’t be enticed by the sparkling photos.
To find out whether you’re getting the best deal, look closely at the drive-off fees. Drive-off fees are the amount you must pay to begin a lease — this includes a down payment and security deposit.
4. Compare Prices From Multiple Providers and Car Dealerships
After identifying the car you want, compare offers for the same vehicle from several dealerships to see which one is the cheapest. To ensure that you get the best deal for your money, take the time to compare sales prices — this will help you identify cars of your chosen model that are within your budget.
Once you think you’ve found the best offer, approach dealerships and get a quote.
5. Ask for Quotes
Now that you’ve found your preferred car model, it’s time to get quotes from different dealers. You can request a quote directly from a car dealership’s website or through its internet department.
You should draft an email to the dealerships asking if the car you want is in stock and what their best sales price is for the particular model. You don’t need to mention you’re planning to lease the car. Instead, show interest in the sales price alone.
Once you receive a response from the dealers, compare the sales prices again. You can easily spot the best deal by looking at how much the dealer charges over the invoice price.
6. Request Lease Payments
Select the car with the best sales price and other preferences that suit you and get back in touch with the dealer who gave you the quote. Tell the salesperson you’ve decided to lease the car, and ask for lease payments at the sales price quoted earlier.
Be sure to set terms with the dealership, including the lease term, drive-off fees, the lease factor or money factor that determines part of your monthly payment and how much you need to make a down payment.
7. Sign a Lease Agreement
Now that you have found the car of your dreams, determined a lease payment that fits your budget and set terms with the dealership, it’s time to agree and close the deal. If everything looks good, you can sign the documents and give the salesperson the check for your drive-off fees. You’ll also need to ensure that your car has insurance.
Good To Know
Leasing a car is a great alternative to buying for many people. Once you’ve successfully leased a car, keep it in good condition, bearing in mind that you don’t own the car. Have all the maintenance performed on time while taking good care of it to avoid additional fees for excess wear and tear when you return it to the dealership.
Mike Parker contributed to the reporting for this article.
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