One of the first things to ask yourself before you need another car is whether you plan to buy or lease a vehicle. If leasing is on your mind, there are a few things you should know about the process before you begin.
Step 1: Know if Leasing a Car is the Right Option
Leasing isn't for everyone. Car leases are typically reserved for people with better credit. If you have poor credit, leasing may prove to be difficult, and if you have bad credit, you may find leasing’s not for you altogether.
Leasing a car and buying a car may have some similarities, but there are key differences you shouldn't overlook. The number one thing to remember about a leased vehicle is that you don't own it. The only time a leased car is truly yours is if you decide to buy it when your lease term is finished.
There are some questions you should ask yourself before you commit to lease a vehicle:
- Is my credit score high enough to get a deal that makes leasing worthwhile?
- Realistically, how much driving do I do?
- Am I hard on my vehicles?
- Can I expect to keep the car clean and in good shape, both inside and out?
Remember, you must turn in the vehicle in good condition. This means no more than normal wear and tear, and mileage within the limit you were given at the start of your lease. Typically, you end up paying if the car comes back damaged, and any additional mileage can cost around 25 cents per mile.
Other Steps in the Car Leasing Process
Now that you've decided to go ahead and try to lease a vehicle, you can follow these steps to make the process as smooth as possible:
- Know your credit. It's easier and typically more affordable to lease a car if you have exceptional credit. Leasing isn’t impossible if you have credit challenges, but it's likely to be more difficult to qualify and more expensive. If you plan on leasing with less than perfect credit, it's important you know your credit score and research the vehicle options other lessees in your situation have tried.
- Find a lease deal. You should research the best lease deals available in your area to see if any dealerships are offering special pricing that you may qualify for on a car you're interested in leasing.
- Negotiate the capitalized cost. The price of a vehicle in leasing is called the capitalized cost, or cap cost, and you want it to be as low as possible. The monthly lease payment is based on the difference between the cap cost and the residual value (which is estimated by the lease company and non-negotiable), plus any applicable taxes and fees, divided by the number of months in the lease.
- Don't forget the GAP. Make sure that your lease contract includes GAP insurance. This protects you if the car is totaled or stolen, so that you aren't responsible for paying the lessor the difference between the actual cash value of the vehicle and the total amount owed on your lease.
Finding a Dealership in Your Area
If you're getting ready to buy or lease a car, but aren't sure where to find a dealer that can work with your credit, we can help. Here at The Car Connection, we work with a nationwide network of special finance dealerships that have lenders available to work with people in many types of credit situations. Fill out our simple, free, and no-obligation auto loan request form today, and we'll get the process of matching you with a local dealer started now!