If you want a new car but aren’t sure owning a new car is right for you, leasing a car can be a good option. If you’ve never had a car lease, you’ll want to do your research ahead of time and know the ins and outs of leasing a car.
What is a Car Lease?
A car lease is a type of arrangement where you can access a car for a period of time without owning it outright. A lessor, or someone who owns an asset like a car, grants a lease to a lessee.
In this situation, a car lessee would make an upfront payment and continue to make monthly payments as part of the agreement to access the vehicle for a set period of time. How Does Leasing a Car Work?
Keen to lease a car? Here are the key steps to follow.
Find a Dealership to Lease a Car
The first thing you want to do to lease a car is to find a dealership. To do this, you can Google [your city] + lease a car and see what comes up. There are also websites such as TrueCar.com, where you can compare lease deals.
Understand the Terms of the Lease
Every lease will have different terms as part of the arrangement.
To lease a car, you’ll need to understand the following terms:
Get to Know the Numbers
If you buy a car outright with cash, you own it in full. If you take on auto financing, the car is yours once you pay off the loan.
However, leasing a car is different and has various financial variables to consider.
Here are some financial considerations to make when leasing a car:
Knowing the financial aspects of leasing a car is important so you understand what you’re getting into.
What Credit Score Do You Need to Lease a Car?
If you’re interested in leasing a car, you want to make sure your credit score is in good shape to get approved. According to NerdWallet, a credit score of 680 or above can lead to the best offers.
Of course, this doesn’t mean if your credit score is lower you automatically won’t qualify. Your income and other factors are considered as well and it can depend. The best way to improve your credit score is to keep making your payments on time and keep your balances low.
What Happens At the End of a Car Lease?
After your lease is up, it’s time to return the car. To return the leased vehicle, it’s best to go to the place you bought it from.
At the end of a lease, you’ll have a car inspection to see about any damages beyond any “normal” wear and tear. You may have to pay more if there are any damages.
They’ll likely look at things like stains, tears, rips, dents, and cracks that could lower the value of the vehicle.
Advantages and Disadvantages of Leasing a Car
If you’re thinking of leasing a car, you want to go over the pros and cons before diving in. Here are the advantages and disadvantages of leasing a car you should consider.
Advantages of Leasing a Car
Disadvantages of Leasing a Car
Is Leasing a Car Right For You?
If you’re thinking of leasing a car instead of buying one, you’ll definitely want to crunch the numbers and do your research. Leasing a car is not a good option for people who drive a lot or want to be able to customize their cars. It’s also not great if you move around a lot, which can result in more mileage and potentially also damage — particularly if you have kids or pets, as these factors can lead to more general wear and tear.
In those cases, buying a car could be a better fit. On the flip side, if you like flexibility and enjoy driving newer cars every few years or so, leasing may be a good fit.
Ultimately, make sure to look for any fees, assess the monthly payment as part of your budget, and make sure it fits your lifestyle and financial goals.