Many people prefer leasing an automobile to buying one, and leasing can be more advantageous than buying in various ways. For example, leasing allows drivers who cannot afford to purchase a new and more reliable vehicle the opportunity to drive such a car or truck, at a cost that is considerably less over the long haul than buying the vehicle outright. Leasing also makes it possible for drivers who prefer newer cars to exchange their automobiles every few years, saving them the expense of maintaining a car as it ages.
When leasing an automobile for the first time, motorists may not be aware of certain things about leasing that could benefit them over the course of their leases. The following are a few such things that drivers may want to consider when negotiating an automobile lease at the dealership.
• Mile restrictions are not set in stone. Standard leases typically limit drivers to 12,000 miles per year over the life of the lease. In such an agreement, a three-year lease would allow lessees to drive 36,000 miles in the vehicle. Any additional miles on the vehicle when it is turned in at the end of the lease would incur a penalty. But mileage limits are negotiable, and drivers who think they will exceed 12,000 miles per year can tailor their leases to allow for additional miles. Extra miles will cost more money, but that extra expense will likely pale in comparison to excess mileage charges, making it well worth the investment for drivers to negotiate extra miles into their lease at the time of signing.
• You may need to pay a substantial initial down payment. Monthly lease terms are favorable to men and women who cannot afford to finance a car or those who want to avoid long-term financing with hefty monthly payments. But many leases require lessees to pay substantial down payments upon agreeing to the lease. If such a down payment proves a hurdle you cannot clear, then it's important to know that some leases do not require a down payment at all, while others require only a minimal payment upfront. However, such leases may be exclusive to drivers with exceptional credit.
• You can comparison shop with a lease. Much like you would comparison shop when buying a car, you can do the same when leasing. After a dealer runs your credit and/or estimates your down payment, you may feel as though you cannot afford to lease a new car. But you have many options to choose from when looking for an auto lease, and each one is likely to make a different offer. If you persevere and do your research, you ultimately may end up with a lease that puts you in a new car at an affordable price.
• Gap insurance protects you in case of a theft or wreck. Gap insurance (which stands for guaranteed asset protection) is available but not standard for an automobile lease. Gap insurance protects lessees and covers their remaining lease payments if a car is stolen or wrecked while the lease is ongoing. Some lessees choose to accept gap insurance, while others do not. The latter group is taking a risk that the car will not be stolen or wrecked during the life of the lease. If it is, the driver will then be responsible for the monthly payments even if he or she no longer has the vehicle. Drivers in the former group will not be on the hook for such payments. Some lessees never use their gap insurance, but the peace of mind it provides is worth the investment for many drivers.
Leasing is a great way for drivers to drive new automobiles they otherwise might not be able to afford. But drivers should familiarize themselves with the ins and outs of leasing before signing on the dotted line.