- Number 1 – It is the best time to lease a car. Lease return vehicles are holding onto their value extremely well due to the limited supply of used cars in the country. Lease payments have fallen to historic lows due to this increased “residual” value. Although your lease payments do not generate equity, they are so low that it almost doesn’t matter.
You can lease a Toyota or Hyundai for as low as $99, depending on which model you choose and where you live…that’s incredible transportation!
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- Key #2 – Negotiate, negotiate, negotiate when leasing a vehicle. You can negotiate finance fees (also known as the “money factor”) of the lease agreement.
The money factor does not have the same meaning as the annual percentage rate (APR). The money factor is typically a decimal number, such as.003, that you must multiply with 2400 to get a true interest rate. This example shows that.003 divided by 2400 gives you a 7.2% APR interest rate. You should always clarify with the salesperson if they give you a number such as 3.0. It is often a money factor of 0.03. There is a huge difference between 7.2% and 3% APR. When negotiating a lease, don’t leave any options open. Reduce your interest to save as much as you can by lowering the sticker price.
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- Key #3 – Short term is the third key to securing a lease deal. Leasing vehicles at a low price is the main purpose of leasing. Long-term leases can be detrimental to your wallet. This is how it should be viewed:
Leasing vehicles doesn’t usually require maintenance, particularly if they’re low mileage (between 10-12k miles per annum) for 2 or 3 years.
Your warranty covers your vehicle, so there’s no need to worry about repairs.
Leasing vehicles are safer than used cars and more efficient than those that have been in service for a while.
Leases that are longer than three years will result in the loss of most of the benefits. You will also pay more in finance fees if you lease for a longer period of time. Also, it is less likely that you will receive a “sub-vented” lease offer from the manufacturer. Stick with a 2- or 3-year lease.
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- Key #4 – If your driving habits are high, you will need to pay an additional 10 dollars per month for a higher mileage limit. While most leases have a limit of 10,000-12,000 miles per year, the Federal Highway Administration (FHWA) reports that the average male between 20 and 54 drives 18,000-19,000 miles each year. This is a large gap, which can lead to problems if you don’t spend a few extra bucks per month to get more mileage. You should consider this: If you exceed your mileage limit, the average cost per mile is $.20. That means that an additional 5000 miles would run you $1000.
- Key #5: Finally, it is important to understand the early termination fees for any financial agreement that you sign. While some automakers may penalize you for leaving early, others will let you leave the agreement under certain circumstances. You need to be aware of the early termination fees before signing on the dotted line.
