Car leasing may be a better option than buying for the right person, but you must take the time to compare several different lease contracts before you jump into one. Contracts are very wordy and intimidating, but they will not be intimidating if you learn what to look for in the contract. Here are 4 different factors you should consider when you are reviewing a lease contract to ensure that you choose an offer that is worth your time.
A High Residual Value
A residual value is what the lessor predicts the car will be worth when the lease period is up. Lower residual values represent cars that do not hold their value and depreciate quickly. Higher residual values are preferred by banks that finance a lease contract, and because of this, banks will offer better deals and lower payments for cars with a higher residual value. Shop for cars that hold their value and you can surely find lower monthly payments.
With all of the fees that are listed in the contract, it is easy to get confused. From the disposition fee to the acquisition fee, the cost of a lease can quickly add up. What you might not know is that these fees are generally negotiable. See if you can get your security deposit waived, try to get the fees reduced, and keep more money in your pocket.
The Interest Rate
When you buy a car, the interest rate is the rate that you pay the finance company to borrow money. When you lease, the interest rate is more often referred to as a lease factor. You should know that you do not have to accept the lease factor the dealership is offering. If you call to find out the factor at competing dealers, you can try and use this knowledge to your advantage to talk the rate down.
You never know when you might need to transfer your contract to another party. Check into the transfer policies written into the lease. If the lease cannot be transferred, you may want to choose a lease that can be.
The key to choosing the best lease is understanding what can and cannot be negotiated. When you compare car leases, you should look for flexibility and affordability. Negotiate interest rates, choose cars with high residual values, and read the terms of the contract closely.