When it comes to getting a new car, many people don’t realize that they have more than one option. You don’t always need to purchase a new car outright—you also have the option of leasing one.
As with any transaction, there are both advantages and disadvantages to leasing a car, so it’s important to research the topic thoroughly before deciding if it’s right for you.
Look for Lease Specials
When looking for a new Chrysler, Ram, Jeep, Dodge for sale or lease, always ask what specials are available to you. This is especially important if you’re going the route of leasing the car. Many car manufacturers provide discounts on leases in order to boost their sales and get more of their vehicles on the road.
Ask about the specials that may be available to you, but remember to read the fine print before you sign on the dotted line. There are likely to be other fees, such as sales tax or registration fees. Keep in mind that whether you currently lease or how high your credit score is may determine if you qualify for specials.
Understand the Car’s Residual Value
When leasing a car, it’s important to know its expected value at the end of the lease. This is known as its residual value. Typically, the value is a percentage of the manufacturer’s suggested retail price for the car.
The residual value factors into how much you’ll pay per month. The higher the car’s residual value is, the lower your monthly payment will be. Most of the time, the value will be 45 to 60% of the suggested retail price.
Know How Much You Need to Pay at Signing
As with any type of lease, you’ll need to make a monthly payment for the duration of the lease. You’ll also need to pay an amount that is due at signing. Sometimes, there are zero-down offers, but more than likely, you’ll need to pay a specific amount when you take the car off the lot.
The more money you put down on the vehicle, the smaller your monthly payment will be. Keep in mind, too, that your payments may go up if you go over the car’s allowable miles per year.
Ask About the Money Factor
A money factor is similar to an interest rate when you borrow from a lender to buy a car outright. The lower the money factor number is, the better deal you’re getting.
It’s always a good idea to convert the money factor into an interest rate. To do this, multiply it by 2,400. This turns it into a percentage and helps you to determine what’s being applied to your lease and if it’s a fair rate in relation to your credit score.
Lease Your Next Car With Confidence
Leasing a car is an excellent option if you want something new to drive but don’t quite have the money or credit to get the type of loan that you want. As with any business transaction, always work with reputable companies when leasing or buying a new car.
Featured Image by Dimitris Vetsikas from Pixabay