Lease a Vehicle
Do you like buying a new car every three to four years? If so, leasing might be a better option for you. There's a difference between leasing and buying a car. People who lease automobiles are essentially renting the vehicle for a few years. After the lease period, you can either return the vehicle and lease a new one, or purchase the vehicle. And because leases feature lower monthly payments, this is an attractive option for people who want to drive nicer automobiles.
Instructions
1. Check your personal credit score. Whether you decide to lease or buy a new automobile, the dealership will check your credit to see if you qualify for financing. You can lease a car with less than perfect credit. However, you won't receive the best terms or interest rate. Before looking for a car, order a copy of your credit report. If necessary, make improvements such as paying your creditors on time or reducing your debts. This increases your credit score and helps you qualify for the best financing.
2. Decide whether a lease is right for you. Leasing an car is much cheaper than buying one. However, dealerships limit the number of miles you can put on a leased vehicle. You're generally allowed 12,000 miles a year. If you go over your allotted mileage, the dealership charges $0.20 per mile. A lease agreement may not benefit persons who drive more than 12,000 miles a year.
3. Determine a lease term. How long do you plan to keep the vehicle? You can choose a lease term between two and five years. Longer lease terms generally feature lower monthly payments. However, if you like driving a new car every two to three years, it's best to choose a shorter lease term.
4. Save money for a down payment. Down payments aren't required. However, if you have bad credit, or want to receive a lower interest rate and monthly payment, a down payment can help. Typical down payments are between 10 and 20 percent of the lease price.
5. Understand the lease agreement. Some leases involve balloon payments, and some people end up owing a lot of money at the end of a lease. This is primarily due to signing a bad lease agreement. If possible, have a lawyer review the lease contract. Ask the dealership to clarify information, and make sure you fully understand the arrangement before signing your name.
6. Buy gap insurance. Although you don't own a leased vehicle, you're still responsible for the car if it's stolen or damaged in an auto accident. Unfortunately, insurance policies only pay the cash value of the car. And since the amount owed on a lease is generally more than the car's worth, you'll have to pay this difference out-of-pocket. Gap insurance covers the difference between a car's worth and amount owed on a lease. Most lease agreements include gap insurance. If not, purchase a policy.
