Leasing a car brings with it many advantages over buying the same vehicle.
Not only do you get the chance to spread the cost of the vehicle out over several years, at the end of the contract you can upgrade to something even better.
However, there are several mistakes people often make when leasing vehicles.
Running into Excess Mileage
As well as the length of your contract and the make and model of your vehicle, one of the most important factors in determining your monthly rate is the mileage limit that you agree to. Many leasing companies set a maximum of between 12,000-15,000 miles per year so it’s crucial that you understand how far you travel on an annual basis. If you drive more than this, leasing a vehicle may not be for you. If you’re worried about exceeding your limit, though, consider going slightly over your usual rate. This will give you some leeway if you professional or personal situation changes over the course of the contract.
Fair Wear Agreements
The “fair wear” agreement determines what you will have to pay should you return your vehicle in substandard condition. Fair wear often refers to things like small dents or scratches, light carpet wear, and slight wear to instruments like the gear stick or steering wheel. What it doesn’t cover is damage caused by misuse or an accident. If you want to learn more about this agreement, take a look at this helpful guide that covers all the usual questions. Remember, if you damage the vehicle, you still have the opportunity to have it repaired before you hand it over. Leaving it to the leasing company to assess the value may end up costing you more.
Terminating Your Contract Early
Leasing contract are generally last between two and four years. If you find yourself in a situation where you would like to end the contract early—for instance, if you can no longer afford the monthly rate or even if you would prefer to switch to another vehicle—you can choose to terminate your contract early. However, this will come at a high cost and should only be done when absolutely necessary. Depending on your lender, there may be a clause you can add at the beginning of the contract to slightly lower this fee.
Leasing a car can be a great alternative to buying outright, but it’s not without problems. Make sure you know what you’re getting in to before you sign the dotted line.
