Common Leasing Questions Answered

In our last episode, we cover leasing versus purchasing a vehicle, today we will be focusing on the some of the major questions that consumers have about leasing.

What Happens if you Drive More than the Average Person?

Leasing can still be a viable option for you. All leases can be tailored to the amount of miles that you drive per year - whether that be ten thousand miles or twenty thousand miles. 

What Happens at the End of Your Lease?
You usually have three options: you can turn your vehicle back in, buy your lease, or use it as a trade-in. To figure out which one of those options is most advantageous for you there's a couple of simple things to look at. Has your leased vehicle been in an accident? If so, give it back to the lease company. Have you driven less miles than your lease allowed? If yes, it may be advantageous for you to buy this vehicle because you can buy it for less than that residual amount which if you remember is the amount they set the vehicle to be worth in 3 years. Let's say that residual amount is 15,000.00 dollars but the car is worth 16,000.00 dollars, go ahead and buy it.  You have got a 1000.00 dollars’ worth of equity or use it as a trade-in. You can use that equity as a down payment towards your next vehicle.  

Now let's say that the car is only worth 13,000.000 dollars and the residual value is 15,000.000 dollars. In this case, you are going to want to give the vehicle back to the leasing company and not worry about taking the loss yourself.

In the third option, if you do decide to release a vehicle most of the times they will waive the disposition fee, a fee charged at the end of a lease to ready the car for sale, and the total amount you spent will come down a little bit.
What Happens at the End of Your Lease if you Have a Lot of Wear and Tear on Your Car?

Keep in mind, the leasing company expects three years worth of wear and tear on your vehicle. They know it's going to have some scratches, some dings, and the interior is not going to look perfect. But what happens if it goes over and above that? You need to talk to the leasing company and your financial professional. Most leases will have an excess wear and tear waiver that allows for a certain amount of above average wear and tear to be forgiven at the end of the lease. 

Keep in mind if you do use your vehicle for more than everyday purposes including hauling, transporting or things of that nature where you put more than excess wear and tear on the vehicle you may want to look at a purchase instead of a lease.  

Everybody knows that when you purchase a vehicle you have an option to do up to a 2 year loan through a 7 year loan, but what about leasing? Your average lease term is going to be 3 years, although terms are available from 2 all the way up to even 5 years, and you can also always adjust your mileage from 10,000 miles a year all the way up to 33,000 miles a year are acceptable for a lease.  

At the end of a lease if you have enjoyed the vehicle and find you are not ready to make another decision call your leasing company. Most leasing companies will allow you to extend your lease for up to another year, at the same price and with the same amount of miles allowed in that next year.  

Can I Accessorize my Lease Vehicle?

Certainly, any factory available accessory you can put on your leased vehicle. One of the great parts of this is that since you are only paying for the usage of that accessory you wind up paying less than full price. After market accessories, for the most part, are not allowed on a leased vehicle.  

What Happens if you Get Into an Accident in Your Leased Vehicle?

If your vehicle is totaled, your lease simply ends and you don't have to worry about any negative equity. The lease simply ends and you can go lease or purchase another vehicle. Now, if the accident is not bad enough to total your vehicle - and it appears on the car fax - at the end of the lease your vehicle value is going to be a little bit less because of that accident. But remember, you already agreed on a residual value with the lease company. If it's worth any less, it's not your responsibility. The accident will not be held against you at the end of the lease. Now let's say the accident was not too severe. The mailbox just happens to jump out at you as you are backing out of your driveway. Just like with any purchased vehicle, you want to go in and have your insurance company repair any damage before you turn it in at the end of the lease.

When is it Not Advantageous to Lease a Vehicle?

If you're looking for a used car, leasing is not for you. If you're going to be paying with cash, leasing probably isn't for you. If you like to customize your vehicles heavily, leasing probably isn't for you. If you're buying a car for a first time car driver, you may want to look at something other than a lease.

How Much Money Down is Required to Lease a Vehicle?

We all know that with a purchase banks like to see 5 to 10 percent of the vehicle down.  With a lease money down is not recommended. The reason being is you are simply protected for the life of that lease from anything that happens to the car if it gets totaled, therefore you are never in the upside down situation.
Can I Trade My Lease Before My Lease Term is up?

That's a great question!  Let's say you just leased a beautiful new coupe, but now things have changed, you are a year and half down the road and you have a family and you need a sedan.  All you do is simply go to your lending institution or lease institution ask them how much you owe on the car, have your car appraised, find out how much it is worth, and use it as a trade in just as you would a normal financed vehicle.   

Thank you for watching our series on leasing! 

Categories: Service, Finance
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