Car Leasing Mistakes to Avoid

Many Americans choose to lease their vehicles, which under the right circumstances, can be a smart choice. However, there are quite a few mistakes that many of them make, and therefore, they end up paying much more than they anticipated. Based on this, there are a few things you need to pay attention to before going into the car dealership, and then you can perhaps save quite a few dollars, as well as some frustration.

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Make Sure You Negotiate the Appropriate Cost

When you go onto the sales floor, quite often the sales representative will start to focus on the monthly payment. After all, the appeal of a lease is that it doesn’t cost as much,at least on a monthly basis. As you negotiate cost, sales representatives will look to bring down the monthly cost of the car, because they understand that’s where most people focus their attention on. However, what you should be negotiating is something called the gross capitalized costs. That is, the cost of the purchase price of the car,meaning that you are essentially negotiating the same as you would if you were buying the car flat out.

The reason for this is that if you choose to buy this car after the lease term is done, it makes buying the car much easier. For example, if you can knock a few thousand off right now, you will not only have smaller monthly payments, but you will also have a much easier time owning the car later, if you choose so.

Make Sure You Negotiate

Just as you would with any other car, you should negotiate the lease. While not everything can be negotiated in the terms of the contract, there is a bit of haggling that can be done. Most dealers will present lease agreements as if they are set in stone, but that’s not the truth, most of the time. The biggest thing you can negotiate is the overall price of the vehicle, which of course can change many other things in the contract.There are also some fees that can be discounted, so make sure you knock this idea around.

Don’t Make Too Large of a Down Payment

Many people will try to put up a large down payment to knock down the monthly cost involved in the lease. While this makes sense when purchasing a car, it can hurt you when it comes to a lease. For example, if the car gets totaled for some reason, the insurance company will pay the leasing company for the car. However, your down payment is probably history. Beyond that, make sure you get gap insurance for a lease, otherwise you may find yourself ‘upside down’ in the case of a typical lease.

Leasing Doesn’t Save Money in the End

Most of the time, your car salesman will tell you that leasing is a less expensive way to get a new car. Monthly payments and down payment requirements might be lower than if you get a traditional loan in the beginning, but in the long run, you always end up paying more. Most of the time, people will simply go from one lease to another, but in the long term, you will always have a lease payment, although you do have the benefit of having a newer car. Far too many Americans go from one lease to another, changing cars every two or three years, which ultimately continues to work against them financially.

Make Sure to Pay Attention to Fees

The fees involved in leasing can be a huge chunk of your upfront cost involved. If you don’t keep a careful list of your fees, you could find yourself paying a large amount of money that essentially is a bit of a surprise. Because of this, you owe it to yourself to know each and every extra fee that is attached to getting a lease, and make sure that the salesperson goes through it item by item, as it can be a significant addition to your costs.

In the End

It is important to pay attention to all of the details as you would with any other longer-term expense, and you need to weigh whether or not the lease is going to work out for you in the long run. Sometimes, a lease is the right way to go, but other times, it is not.Beyond that, remember there are certain mileage restrictions for a lease as well, so if you do an extraordinarily large amount of driving, leases are all but an impossibility for you.

In general, leases are typically for a very specific type of consumer, and unfortunately,far too many people jump into them because they can get “instant gratification.” While this situation can work, make sure you take your time and think through all of the numbers before jumping in.