Leasing a car can save you money. But it could also end up costing you too much if you don’t pay attention to the fine print. Here are five things you need to keep in mind.
Paying Too Much Upfront
Ideally, don’t pay more than $2,000 upfront when you lease a car. Sometimes, it’s better to put down nothing at all and include all of your fees and costs into the monthly lease payment. This is because if something happens to the car before the term ends, you will lose all the money you paid upfront while the leasing company gets its insurance money.
Not Buying Gap Insurance
Consider that your leasing company says that you can buy the car for $15,000 at the end of your lease. If you total the car before the lease expires, an insurance company will determine the market value of the vehicle. If they say that the car is worth $10,000, then you’ll have to pay $5,000 to the leasing company. Unless you have gap insurance. So buy it. It’s cheap and useful.
Underestimating How Much You Drive
Leasing contracts have annual mileage limits. If you cross that limit, you have to pay about 30 cents for each additional mile. This could multiply fast. So know your driving habits before you lease the car.
Not Maintaining It
If your leased car is damaged beyond the normal wear and tear, you’ll have to pay for the repairs. So ask about the lease-end condition guidelines that specify the type of damage you’d have to pay for.
Leasing For Too Long
Always make sure that the lease period matches or is less than the car’s warranty period. Usually, warranties last for three years but check. If you keep the car for longer, you’ll have to buy an extended warranty. Or you’ll have to pay for maintenance and repairs while paying the monthly lease. If you plan to lease the car for a long time, you’ll be better off buying it. Then you can drive it for years without worrying about the lease payments. Use an online calculator and figure out whether leasing or buying will save you money.