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How to Lease a Car

Omkar Phatak Apr 17, 2020
In this post, we discuss what is car leasing and its pros and cons, before talking about how to find good deals.
Having a car is a necessity, if you commute long distances daily, for service or business purposes. If you need a car for your business, but don't have the capital at present to buy one, you can opt for a leased one instead.

About Leasing Cars

Leasing is simply renting a car for a fixed period of time, instead of buying it. The down payment that needs to be made for a car lease is substantially lesser than what is needed for buying a car. A high-end car is easily rented on lease, than bought. Businesses opt for renting cars on lease for short periods, rather than buying them.
One of the prime advantages of doing this is the access to luxury cars at a low price. However, in the long term, having rented cars can burn a serious hole in the pocket, as the rent value may not be proportional to the depreciated value of the car and you may have to pay out of your pocket for excessive wear and tear of the vehicle. It may turn out to be a liability in many cases.
Let the lease period be long enough to justify the down payment you make and short enough so that you do not end up paying more than the car's intrinsic sales value. Also, since you don't own the car, there will be certain restrictions regarding its usage, which you must comply with. The advantages must be compared with its associated disadvantages, before making a decision.

How to Get the Best Deal

First and foremost, what you need to decide upon is which car model to lease. All the economics of a lease agreement and rest of the details will depend on the car you choose to lease. The more the showroom price, more will be the down payment on the lease and higher will be the monthly rent.
Check out the best cars, before you choose one. I would suggest that you go for a low-end car, with good gas mileage. Opt for a low-cost car, as it will keep the monthly installments down. So choose one wisely, which meets your requirements and also fits your lease budget.
Once you decide on the car, you will have to look for dealerships which offer lease for that car model. Locate local dealerships which offer the service. Inquire about the down payment terms and monthly rent that you will have to pay for that car. While negotiating, go for a higher down payment, as it will ensure that you get lower rent installments later.
Inquire about the depreciation value of your chosen car and make sure that you understand all the lease terms. Know what is the auto insurance provided by the dealership and how will the damages in case of an accident be covered. Calculate and see if the dealership is offering a fair lease agreement, with respect to the depreciation of the car's value.
Make sure that you have a clear idea about what the lease will cost you over the whole period of lease agreement. Compare it with the interest rates offered by other dealerships. Sign on the dotted line, only after you have ensured that you are getting a fair deal.
It is essential that you work out the projected costs of the whole deal, before going ahead. Take a calculated risk, instead of entering into an agreement blindly. Remember that in the long run, it is always better to buy your own car. Leasing is only a short-term solution.