How Does Leasing a Car Work? What is an Auto Lease?
If you're wondering what is car leasing, or how does leasing work, then you're in good company. Not everyone is familiar with all the benefits of leasing a car. In fact, there are many auto leasing options available.
In the most basic terms, vehicle leasing is the rental of a car, truck, SUV, minivan, sports car, or electric car for a fixed time period. Auto dealers offer vehicle leasing as an alternative to traditional auto purchase or financing. It is widely utilized by businesses when acquiring a company vehicle. In general, leasing costs less than buying a car, although there are several restrictions, such as vehicle mileage limits and customization agreements, that can determine whether it is better to buy or lease a vehicle.
Our ten most frequently asked questions regarding auto leasing.
Is It Better to Lease or Buy a Car?
The short answer to this question is: 'it depends'. If you drive a lot of miles annual and like to keep your vehicles for longer than three years, leasing won't be very beneficial for you. However, if you enjoy getting a new car every two to three years and have no interest in the trade-in/selling process of your current vehicle, you could be a prime candidate for an automotive lease. Essentially, the difference between auto leasing or buying really comes down to your financial, automotive, and personal priorities.
Also, it is worth mentioning that some owners find high mileage leasing to be more beneficial in terms of financial safety and security than vehicle ownership. Statistically speaking, despite the overage fees you may pay when returning a high mileage leased vehicle, it is likely that you will come out ahead, compared to buying a car. High mileage causes a significant reduction at resale, but with leasing, it's already taken in to consideration. Additionally, the more time you spend on the roads, the more susceptible to accidents you will be. Therefore, if or when that accident occurs on your own vehicle, you would receive wreck history on CarFax, as well as a resale/trade-in deduction for vehicle damage. With leasing, you are not responsible for the deduction in value from that accident.
Is Leasing a Car a Good Idea?
There are many benefits of leasing a car that you just can't get with other auto financing offers. These benefits include lower payments, maintenance provisions, and avoiding having to trade-in or sell your old vehicle. For more details on the benefits of auto leasing, our auto finance department is waiting to answer all of your questions.
How Much Does Car Leasing Cost?
If you're wondering how much does it cost to lease a car, the good news is that it's negotiable. Many manufacturers and dealerships offer zero-down lease offers. Of course, there are varying factors that qualify or disqualify individuals from these types of leases. Factors such as credit payment history, credit scores, etc. Just don't forget that paying nothing down typically means bigger monthly payments. Vehicle leasing, like traditional auto financing, works like this: the more you put down, the less you pay monthly
Is There Such a Thing as Used Car Leasing?
Yes, you actually can lease a used car. This type of 'used car leasing' is a little known 'secret' among car dealers but most dealers do offer Certified Pre-Owned leasing specials on CPO vehicles less than four (4) years old and with less than 48,000 miles on the odometer.
Can You Purchase The Vehicle You Are Leasing?
Most auto lease contracts have buy-out clauses in them in case you fall in love with your car and would like to finance it. Keep in mind the purchase price of the car may vary. This depends on the residual value of the vehicle after the lease agreement has expired. There are also options to purchase your leased vehicle before the contract has been fulfilled. For this, however, you must speak with a leasing manager. Only they can provide these buy-out details and take care of any early termination fees that may apply.
Will I Get My Deposit Back From Auto Leasing?
Generally a deposit is refundable at the conclusion of a lease. At least this is true when all leasing contract obligations have been met. Please note that a deposit (a.k.a. a security deposit) is not the same thing as a down payment. A down payment is not refundable but security deposits typically are. It is important to note some leases require non-refundable deposits. Be sure to read your lease agreement diligently and ask as many questions as you have before you sign on the dotted line.
What Credit Score Do I Need To Lease a Car?
Typically, a credit score of 619 or lower is classified as "subprime". While a subprime borrower isn't automatically declined, a credit score lower than 619 means you will typically have to pay a higher interest rate and/or down payment. There are various steps you can use to improve your credit score such as apply for too many loans, employment history, and consistent on-time payments.
Can You Lease A Car With Bad Credit & No Money Down?
While it is not impossible, it is difficult to lease a vehicle if you have a poor credit rating and no money for a down payment. Most zero-down lease offers require a healthy credit rating. But don't worry, there are plenty of options available for car shoppers with less-than-stellar credit scores. To explore your leasing options, simply contact our financing team.
Can I Turn In My Leased Vehicle To A Different Dealer?
Typically speaking, yes, you can trade in your leased vehicle at a different dealership. It must, however, be an authorized dealership for the vehicle manufacturer. It's probably obvious, but you can't turn a leased car into any other brand of dealership. You can, however, turn your leased Chevrolet into any authorized Chevrolet dealership across the nation. Again, assuming all your lease contract obligations have been fulfilled.
Does A Car Lease Include Maintenance?
One of the more popular benefits of leasing a car is the maintenance provisions available in most lease agreements. Specifics may vary within individual lease contracts, but almost all leases will cover your leased vehicle's normal maintenance and service needs. These include filter and fluid changes, normal tune-ups, and regularly scheduled maintenance typically do not cost the lessee anything out of pocket.
If you have more questions about vehicle leasing, current promotions, or related topics, then contact us today. Our team of highly knowledgeable car leasing agents are waiting to respond to all your questions.