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With a slew of incentives and rebates that have made car ownership more affordable than ever, does it still make sense to lease? Yes, it does, if you fit the profile of the ideal lessee: someone who likes to drive a new set of wheels every two or three years, wants to avoid the hassle of reselling or trading-in a vehicle, is able to keep a vehicle well-maintained at all times, and is comfortable about making monthly payments towards the use of the vehicle instead of the vehicle itself. Since monthly lease payments are applied towards the depreciation and use of the vehicle, they are generally lower than monthly loan payments for purchase of the same vehicle. Leasing allows you drive a higher-end model for the same amount that you would normally pay to own a lower-class vehicle. Indeed, “getting more car for less money” remains leasing’s biggest selling point. Still not convinced? Here are a few things you can do to save more on your lease.
Negotiate the price of the vehicle. Some consumers assume that they forfeit their right to haggle the price of the vehicle when they lease. Not only is this assumption false, it could also cost you a few hundred dollars more on your lease. Negotiating the vehicle’s price often translates to the most substantial savings you can have on your lease. Here’s a tip from savvy lease-holder: Don’t bring up the subject of leasing until after you and the dealer have settled on the vehicle’s price.
Take advantage of lease incentives. To further reduce the customer’s monthly lease payments, some manufacturers offer lease incentives, which often come in the form of manufacturer’s subsidy on the leased vehicle’s residual value or money factor. Just make sure you won’t be purchasing the vehicle at the end of the lease term, as lease incentives could raise the purchase price of the vehicle if you decide to buy it from the dealer.
Keep an eye on finance charges and other fees. Leasing comes with a raft of charges and fees that must be paid upon initiation and termination of the lease. These fees include the acquisition fee, the lease disposal fee, and the lease finance charge, as well as extra charges for extended warranties, insurance coverage, and other items. Moreover, pre-terminating the lease subjects you to an early termination penalty. Use a calculator when discussing lease terms with the dealer and double-check every figure before signing the contract. Unfavorable terms could be used as additional negotiating points.
Buy extra miles in advance. If you anticipate driving more miles than the pre-determined annual mileage limit, it makes sense to purchase additional miles outright. The extra cost would still be lower than the excess-mileage penalty. If you’re lucky, you may even find a finance company that would be willing to refund you on miles purchased in advanced that were never used.
Consider leasing a used vehicle. Leasing a used vehicle gives you the same benefits as leasing a new vehicle, but lease payments on a used vehicle are generally lower because you would be paying for less depreciation. However, older vehicles tend to have more service problems than newer ones, and this could translate to higher maintenance and repair costs for you. To minimize this financial risk, go for a used vehicle that comes with a full and comprehensive warranty for the duration of the lease.
Assume someone else’s lease. When you assume someone else’s lease, you take over payments on that person’s lease. A lease-assumption deal spares you from upfront fees, such as down payment and other lease initiation fees, and you only have to make the monthly lease payments from the time you assume the lease. However, assuming someone lease’s lease means taking on the former lease-holder’s responsibilities as per the lease terms. This means you would still have to cough up the dough for any existing damage to the car, excessive wear and tear, and termination fees at lease-end. |
