The Simplified Modern-Day Buying Guide: Part 2
Welcome to the second installment of payment options – leasing! Previously, we discussed financing, which can be found here. The term “leasing” has recently become a hot topic, but it still is a nebulous concept to many people. Therefore, it begs the question – how do you know leasing is right for you? Some matters to consider include if trading vehicles frequently is appealing, if you drive relatively low miles, and the fact that the cost of ownership is greatly reduced. Let’s take a look at how a lease might be a great option for you.
With average loans ranging anywhere from 60 to even 84 months, leasing is the perfect opportunity for a significantly shorter term. Typically, leases are ran for a 36 month term, along with the options to do 10,000, 12,000, or 15,000 miles per year. Some great advantages to this length of term, especially with FCA products, is the fact that you will almost always remain under factory warranty for the entirety of your lease. This greatly contributes to the cost of ownership – the only thing you would pay for during your lease would be general wear and tear, namely tire rotations and oil changes. It is also a great option for someone who likes to trade vehicles every three or so years; there is no negative equity that can build with a traditional financed loan, ensuring you’re always ahead.
One of the greatest misconceptions that comes along with leasing is the fact that you have to have the exact amount of miles you signed for on your vehicle every year. That’s not the case! At the end of 3 years, you just need to have 30, 36, or 45,000 miles on your vehicle. It is important to note that if you are turning your lease in with no intention of buying it out, most companies charge $.25 for every mile of overage.
Finally, the greatest aspect to be aware of is what the process is once your lease is up. First, you would bring your vehicle to an authorized inspection site, where someone from the lease company would ensure that the vehicle is in decent shape and evaluate it for excessive wear and tear. If everything checks out, the next step would be to decide if you would like to buy the vehicle out or if you would like to turn it in and start again. If you chose to do the latter, it’s a simple process – come in and sign some papers and be on your way; factors like mileage overages and excessive wear and tear will be charged to you at this point if it applies. If you chose the former, there is a guaranteed residual that was provided during the initial paperwork. The payout you receive at the end is based upon the remaining payments and the guaranteed residual provided at the beginning. At this point, excessive wear and tear and mileage overages are not considered if you are purchasing the vehicle.
That’s the jist of it! If you have any questions that I didn’t cover, feel free to comment below. Keep an eye out for the last installment – cash transactions or outside lending!