You need a new vehicle and are now in the process of deciding under what terms you are going to obtain it, whether through a lease or financing with an auto loan. If you are considering leasing a vehicle, there are some laws in place you need to be well aware of so you can get the most out of your arrangement with the lessor. The Consumer Leasing Act dictates that leasing companies must disclose all the terms, costs and the final payment amount of the contract they are offering you upfront.
What Should I Know Before Leasing?
Before you sign a lease, legally the lessor is obligated to provide you in writing with the following:
- Total Cost – including down payment amounts, security fees and registration costs
- Purchase Options – sometimes consumers leasing a car can choose to purchase the vehicle at the end of the lease arrangement, and these terms need to be provided to you upfront
- Lease Requirements – such as the minimum and types of insurance you will need to carry
- Warranty Information – the lessor must disclose the full terms of the warranty covering your leased vehicle and who is responsible for maintaining your car
- Balloon payments – large payments to be made at the end of a long term arrangement are called balloon payments, and the maximum amount allowed by law for this final payment are legally capped at 3 times a regular payment
- Wear and Tear Assessment – any extra payments to be made if certain parts of the car are damaged or worn from over-usage or mistreatment
- Termination – the lessor must let you know upfront any reasons why they would end the terms of your lease agreement
Leasing can be a great option for those who desire a new car every few years, but there are some pitfalls to be wary of. By educating yourself on all the laws in place to protect you, you can make sure you get the best value for your money.