Are you wondering how does leasing a car work? If yes, you should check out our guide here explaining the car lease process.
Many people lease their cars, and for a variety of reasons.
For one thing, leasing allows you to make payments, making it the more affordable option. It’s also a great way to get your hands on a new and technologically improved vehicle every so often — and who doesn’t like an upgrade?
While leasing sounds simple enough, the process is a bit more complicated than you may think. If you’re wondering, how does leasing a car work? Then keep reading. We’ll explain everything.
How Does Leasing a Car Work?
When leasing a vehicle, you’re entering a contract under the terms of your dealership. That’s the simple part. The terms of the contract are where things can become confusing.
The typical terms you are agreeing to are as follows:
- Your down payment
- The length of the lease, which is usually from two to four years
- The vehicle’s worth and it’s expected worth at the end of the lease
- The fees you must pay at the end of the lease
- The money factor, which is more or less an interest rate
- Termination fees if you want to break the lease early
- The allotted miles you can drive each year before having to pay a per-mile fee
- What is designated as “wear and tear” and any incurred fees for excessive wear and tear
- Consequences of a misses lease payment
Overall, when you lease a vehicle, your monthly payments are calculated based on said vehicle’s depreciation value plus the interest and fees. It’s also important to note that leasing a vehicle isn’t the same thing as financing a vehicle. When you finance a vehicle, you’re essentially taking out an auto loan to buy it.
FYI, Monster Cars offers both leasing and financing options.
The Pros and Cons of Leasing
As mentioned above, there are a variety of reasons for leasing a vehicle. Those reasons are often based on the advantages and disadvantages that come with leasing. They also apply to everyone differently.
Here are the pros of leasing:
- Lease payments are lower than auto loan payments (if you’re weighing your options between leasing and financing)
- The downpayment for a leased vehicle is significantly cheaper
- It allows you to get a brand new car with all the fancy upgrades
- The vehicle will be covered under the manufacturer’s warranty under the lease
- You don’t have to deal with selling or trading your vehicle
Here are the cons of leasing:
- continuous leasing often costs more than buying a car outright in the long run
- You absorb the depreciation costs
- There are fees and penalties to watch out for
- Breaking the lease can be expensive
- You can’t move out of state with a leased vehicle
- Your credit score may affect the cars you’re able to lease
- When the lease ends, you won’t have a car anymore
If you’re thinking about leasing a vehicle, it’s a good idea to weigh the pros and cons against your current situation and needs.
Thinking About Leasing?
Despite the cons, leasing a car remains a great option for a lot of people.
If you want to know more about how does leasing a car work or other information about vehicles, check out the rest of our site. We’re dedicated to all things auto-related.