You need to know your mileage limit that is on your lease agreement. Normally the millage allowance is between 12-15 thousand miles per year. So many people take leases without having any idea of how many miles or kilometers they will drive per year, big mistake. Do some math and figure this out before making the decision to lease or you will pay, literally. Keep your car under that limit or you’ll pay up to 25 cents for every mile over it. It may not sound like a lot but when you multiply that quarter by thousands you will understand better and respect this tip.
There exists a section on your lease agreement called wear and tear. It will describe in detail what the leasing company will accept as regular wear and tear and what is considered excessive wear, which will possibly add more to your final payment. This is very important for people who take over leases that have already experienced significant wear & tear.
Make sure if you assume a lease or get out of a lease that the car is in top shape.
If you are in a lease agreement and your car was in an accident you need to know if you are covered. An insurance company may not pay what still owes on the car after an accident. This is usually due to the fact that your vehicle can sometimes depreciate by an amount that is more than what you have paid on the lease. See if your lease has something called gap insurance to cover this difference so you are safe and fully covered.
One of the most important sections of the auto lease agreement is the Early Termination section. This section stipulates what will occur if you decide that you don’t want the car lease anymore or if the car is in an accident. Normally you will be mandated to pay at least the remaining of the lease payments, something called a disposition fee and probably other fees. These charges could come back to haunt you so please make sure you understand this section BEFORE signing the lease contract.
If don’t want your car anymore then you can use CarLeaseDepot to find someone to assume your lease and thus avoid paying the remaining lease payments.
Always take the time to read your lease agreement thoroughly before putting your John Hancock (signature). There is always a lot of fine print so bring a magnifying glass if you have to and read it through. Sometimes the lease agreement will have restrictions on your lease. An example, some leases will restrict you from taking your car out of the country or even state. Be smart and even ask a friend or family member to look it over in order to cover all bases.
Be careful with open-ended leases as these types require you to actually purchase the car at the end of the lease. This could really hurt you if the fair market value of your car has dropped due to market conditions. Take Chrysler for example, people were returning their leases and then Chrysler simply was having trouble selling their larger vehicles because of high gas prices. Therefore they have almost stopped leasing completely as it is hurting their bottom line as some cars are hard to sell in this market condition. Imagine you have an open-ended lease and buy the car for $20K but the fair market value is $10K….that is a bad business decision. Make sure that the resale value of the vehicle you are about to lease is really strong and high. Normally this is not an issue for high end or luxury vehicle leases. However, one benefit is that an open-ended lease usually has cheaper monthly payments.
With today’s crazy market volatility it seems best for many gas guzzlers to just give the car back to the dealership and find a new lease to take over. Close-ended leases seem to be the most popular as it gives you the option of purchasing the car at the end of the lease term OR walk away without buying it at all. The purchase price or buyout value is determined before the lease is signed.
Simply put, closed-ended leases offer you the power to choose what is best for you.
As you know the longer you own any asset the lower the value of the asset unless of course we are talking about a Mona Lisa or the Trump Towers. With car leasing, you need to think of a lease payments as the amount the car depreciates (drops in value) while you drive it. How is this depreciation or amortization calculated? It is figured by subtracting the car’s projected value at the end of the lease (aka residual value) from the current retail price (MRSP).
Ok so if your car has a retail price of let’s say $25,000 and have a future value of $15,000 in 4 years (48mth lease), the depreciation is the difference between those figures, $10,000. Low and behold, you will be making payments on the $10,000.
Hey world!
Bored? Well enough of that! Check out these cool videos on the Car Lease Blog. Who knows, it could help you find your next car lease.
Most of these videos are just random auto videos that do not relate to lease assumption, lease swapping, car lease take over…they are just plain good videos for your entertainment.
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