If you are a first-time car lease owner then there are some things you might have to consider before you go ahead and sign the agreement.
You can compare leasing deals by using comparison websites to make sure that you find a deal that is within your budget and that you know all the costs involved.
What Is Car Leasing?
Leasing refers to the process of borrowing a car for a set period of time while paying monthly instalments to cover the use of the vehicle.
A personal hire contract is the official agreement that is signed once you have applied to lease a car and was successful.
This process is fairly straightforward as you return the car after the contract has ended, or you can opt to take out a personal car purchase which works exactly the same, the only difference is that at the end of the contract you would have the option to purchase the car that you have leased.
What Would You Need To Lease A Car?
There are several documents that are needed for the application process of leasing a car. For starters, you would need to provide your personal details, proof of employment and finance or banking details.
You should also have a valid drivers licence, be over the age of 18 and have car insurance.
Costs Involved With Leasing
If you are considering leasing a car, there are a few things that you might want to keep in mind. You can qualify for a lower rate if you pay money upfront.
If you happen to be involved in a car accident and the car is wrecked, then your car insurance will have to cover the costs of the car being damaged or written off, but even though you have paid the upfront fees, you most likely will not be reimbursed.
Here are some the costs explained:
There is an initial payment that has to be paid on the agreement of the lease, but this is not a deposit. This is calculated to help reduce the monthly payments.
The initial amount is a once-off multiple of the monthly payment fees which means the higher the amount you pay the first month, the less the instalments will be.
When looking to lease a car, you can set out the amount of miles that you feel you might travel. Depending on how high or low you set it there is a cost involved.
Should you exceed your initial limit there is a penalty charge, if you have stated a higher mileage to begin with your instalments will be higher to cover the cost.
You are able to choose the lease terms that you want, they are typically available from 24,36,48, and 60-months.
If you choose a longer lease term, the payments will be much cheaper. There are also options of leasing for a shorter period of 24 months, but this is a much pricier option.
Other Tips to Keep in Mind When Looking to Lease
Leasing a car can be a great way to get access to the latest models without having to break the bank. However, there are certain things that you need to keep in mind when looking for a lease. Here are some tips on what to look for when leasing a car and how to make sure that you get the best deal possible.
- Only lease the car for the warranty time-period.
- Choose cars that depreciate at a slower rate.
- Look at other car models similar to the one you like to find a cheaper deal.
- Check lease agreement for gap insurance.
- Choose an accurate mileage.
- Have all the documents ready so that there is no delay on the processing of the lease.
- Discuss the maintenance package beforehand.
- Be sure that the initial payment is something that you are happy about.
How To End Your Lease Agreement
Returning Car Before Lease Agreement Is Over
If you decide to return your car before the lease agreement is over you will likely face termination costs. This cost is usually half of the remaining payments left of the contract.
Buying The Car At The End Of The Lease
Since the personal contract hire does not include purchasing the car after your contract ends, you can however still ask the lease company to make a purchase.
You can also choose to extend your lease after it ends if you want to continue driving the same car.
These are all the necessary things that you need to take into consideration when you are looking to lease a car.
Since leasing is a much cheaper alternative to buying a car, you can find great deals on leasing options and negotiate your contract agreement to best suit your budget and find the car that you want to drive.
Be sure to have all your documents on hand when applying so that the process is completed quicker!