10 things to know about leasing your first car€¦ · 10 g leasing your first car 3. not all cars...

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10 THINGS TO KNOW ABOUT

LEASING YOURFIRST CAR

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10 Things to Know About Leasing Your First Car

When it comes to financing your first car, you have two main options—leasing and buying. Leasing is a great option for first-timers for a variety of reasons starting with lower payments. However, there’s a lot you need to know before you dive into the leasing process. Read ahead to learn more about the 10 Things You Need to Know about Leasing Your First Car!



As with any big purchase, there are going to be a lot of important terms flying around that you need to understand. In order to have the most streamlined and enjoyable leasing experience possible, you should know what all of the following terms mean when they’re brought up throughout the process:

• Cap cost: the total cost of the car that you’re looking at

• Down payment: money you put down before driving off the lot

• Lease term: the number of months that you’ll be making lease payments

• Residual value: the estimated value that the vehicle will have at the end of your lease

Throughout this guide and the leasing process that you’re about to embark on, you’ll see these terms come up pretty frequently.

1. There are Terms You Need to Know.



Leasing a car is a lot like buying a car. You start by determining a budget that works for your personal finance circumstances. It’s recommended that you not spend more than 20% of your monthly take-home income on expenses related to your vehicle. This includes your lease payment as well as any maintenance or repair costs that you might need to pay.

Then, you’ll need to find a vehicle that you like at a dealership that is accessible to you. It’s not uncommon to drive a few hours to a dealership, but it shouldn’t be too far away in case you need to make more than one trip to the dealership.

Once you have the vehicle that you want to lease picked out, you’ll meet with the finance team at the dealership. One of their finance professionals will sit down with you to go over your leasing options as well as your budget and lifestyle.

Depending on your personal finance needs, these finance professionals will help you determine what you need out of a car lease.

2. Leasing is Fairly Simple.



3. Not All Cars Can Be Leased.Not every car that you see on the lot is going to be able to be leased. When determining which car to lease, you need to consider this fact. While searching for a car to lease, you’ll want to look primarily at new cars because almost every single new car is able to be leased. Whether you personally can lease it is dependent on your credit history, but typically any new car you see can be leased.

Your next best option is to lease a certified pre-owned vehicle. Not all certified pre-owned vehicles can be leased, but many of them can be depending on the dealership that you’re working with. Plus, certified pre-owned vehicle leases are usually a little more flexible in terms of your budget.

You can also lease a used car. However, when you decide to lease a used car, you won’t have quite as many options to choose from as not all auto manufacturers allow leases for their used models. Manufacturers that allow leasing for their used models include Acura, Audi, BMW, Chrysler, Dodge, Ferrari, Fiat, Honda, Jeep, Hyundai, INFINITI, Kia, Lexus, Lincoln, Mazda, Mercedes-Benz, MINI, Mitsubishi, Nissan, Porsche, Ram, SRT, Toyota, Volkswagen, and Volvo.



There’s a reason that leasing is just as popular as buying as a payment option for vehicles. In fact, there are a handful of reasons that people choose to leasing. Some of the best benefits of leasing a vehicle rather than buying it are as follows:

• Lower monthly payments than buying• Lower or no down payment• Flexible lease terms that you can negotiate• Selection of newer models at lower costs

4. There are Many Benefits to Leasing.



There are many different factors that make up your car lease, and many of them are negotiable. The first thing that you’re able to negotiate is the cap cost of the car. The lower this is, the lower your monthly payments will be. You’ll also be able to negotiate the lease term which can make your monthly payments even more manageable.

Negotiating the cap price also gives you the ability to negotiate the buyout price if you should choose to buy the car after your initial lease instead of simply returning it to the dealership. Tweaking your lease term and monthly payments will allow you to negotiate a buyout price that works with your budget.

After you have the cap cost figured out, it’s time to talk about the down payment. Often times, you can negotiate not having to pay a down payment at all. If you do, you can almost always negotiate the amount that you put down.

One more thing you can negotiate is how many miles are included in the lease. Every lease includes a certain amount of miles that you can put on the vehicle per year. You’ll typically get between 10,000 and 12,000 miles on a standard lease. However, if you commute and travel often, you can negotiate to have more miles added which will help you avoid additional charges for extra miles at the end of the lease.

5. You Can Negotiate a Lease.



Dealerships that offer leasing as a payment option will often also offer lease specials. Lease specials, which are also often referred to as “lease deals,” are designed by the manufacturer to help you get the vehicle that you want with the budget that you’re on.

Lease deals are often created for specific models and vary from model to model as well as from dealership to dealership. Before you start the financing process, be sure to explore the lease deals of the dealership that you’re working with on their website.

Even if a dealership isn’t advertising their current lease deals on their website, they may still be offering some. When you have an idea of which model you’d like to lease, call the dealership and ask about what lease deals they have going on.

6. There May Be Lease Specials Available.



As you already know, there a few different types of payments associated with leasing a car such as the down payment and monthly payments. However, there are a few other fees that you should be prepared for when you head into the dealership to put your lease together including the following:

• Acquisition fee: The acquisition fee is charged by dealership to set up the lease and is normally tacked onto the cap cost.

• Drive-off fee: This fee is comprised of a few different smaller fees all bundled into one including the first month’s payment and the fees for the tags, registration, title, and sometimes taxes.

• Security deposit: Not all dealerships ask for a security deposit, but if you pay one, you’ll get it back at the end of your lease unless the car exhibits excessive wear-and-tear.

• Sales tax: Depending on the state you live in, you may have to pay sales tax on the depreciated portion of the vehicle that you use during your lease.

7. Expect a Few Additional Fees.



The cost of maintenance is not included in the payments you make for your lease each month. If you’re leasing a new vehicle, you won’t have to worry about visiting the service center every couple of months. Unless you’re in an accident, you’ll really only need to take care of routine maintenance which includes oil changes, tire rotations, brake replacements, and the like.

Even when leasing a car, you need to have insurance. However, you should consider doubling up with GAP insurance in case the worst happens. If the car that you’re leasing becomes totaled one way or another, GAP insurance will cover the difference between the value of the vehicle at the time of the accident and how much you still owe on your lease. While you may not want to consider this as a possibility, it’s better to be safe than sorry.

8. You’re in Charge of Maintenance.

9. Consider Getting GAP Insurance.



10. You Have Several Exit Options.When your lease comes to a close, you may be thinking about how much you’ve grown to love the car that you’re leasing. If that’s the case, you have the option to buyout the rest of your lease. Essentially what this means is that you’re just going to pay off the vehicle like you would if you had been planning on buying it from the beginning.

If you choose to buyout your lease, you’ll pay off the rest of the cap cost that you established at the beginning of your lease and re-establish a contract with the dealership. You’ll also owe a purchase option fee.

If the car you leased didn’t turn out to be all that great or you’re ready to explore a new model, you can simply return the vehicle to the dealership. Besides a return fee, you won’t really have to do anything when you drop the vehicle off at the end of your lease.

Happy Leasing!

10 things to know about leasing your first car€¦ · 10 g leasing your first car 3. not all cars...

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