Leasing has gained massive popularity over the years. A lease provides you with the duties of owning a car, registration fees, insurance, and legal liability. However, you don’t own the car, but it is the leasing company or the bank that owns it.
That setting may not be ideal for everybody, but leasing actually has great benefits over buying a new car. It offers low monthly payments, flexible down payments, and also tax benefits. Moreover, a lease is 36 months or 36,000 miles, which typically matches the warranty of most cars. There are several car leases site such as https://www.letstalkfinance.co.uk/ that you can lease a car from.
Here are some factors that you should consider before you lease a car
For you to lease a car, you must have a good credit score. There are two types of car lease deals- promotional and normal deals. Car manufacturers and their brokers offer promotional deals for a specified period. The deals are highly advertised, and you can view them on various car company websites.
Normally, the special deals are based on lowered prices. One of the disadvantages of the deals is that they only apply to a few models, and not every car is in the company’s lineup. So you need to have a good credit score to qualify for them.
The residual value means the value of the car after the end of the lease. Normally, a higher residual value of the car means a better deal. Leasing a car means you pay for the value that you’ll use over the time you’re leasing it for. For instance, if you are leasing a $25,000 car for three years. If the value of the car at the end of the three years is $15,000, the value of the car that you used is $10,000. To get your monthly payments, you divide $10,000 by 36, which is the total number of months in the three years. This will give you around $277. This is the amount you will pay every month.
The money factor is equivalent to the interest. It is not always stated. It is also an essential factor that you must put into consideration when leasing a car. It is negotiable in the agreement. The car dealers use credit history to arrive at the interest rates. You should ensure that you get a reasonable interest rate if your credit score is excellent.
Even though it may be tempting to opt for a longer lease like a four or five years term, it is best to for choose less than three years term. This will ensure that the vehicle will still be covered under the manufacturer’s warranty, which will save you a lot on repairs. A longer lease also means that you will be paying more money towards a car that may be you never plan to own.
You should also consider the allowed miles when leasing a car. Many leases offer 12,000 annually, meaning if you go past this, you will pay an additional fee per the mile you drive. So you should determine miles you can cover even if it’s for business car leasing to avoid inflated additional costs at the end of your fees.