Lease a Car and Avail the Benefits of a New Car

ByJack M Clifford

Buying and using a brand new car is definitely an exciting and overwhelming experience, but how many of us carry the same excitement using the same car for years? Let's be honest - no one. It's an undeniable fact that carrying the same fervor for years is not possible. Within a very short time your brand new car becomes old and you will soon lose interest in it.

For the present generation, however, the only formula to get noticed is to continuously upgrade and update. May it be their hairstyle, cell phone, accessory or computer - they want the newest and best. For such people, leasing a car is an attractive alternative to buying a car. It is not only an ideal way to use the latest models, but also gives them an opportunity to drive luxury cars, which are often reserved for the rich class.

Below are some of the benefits of leasing a car over purchasing a new one.

Drive home a brand new car
Unlike in buying a new car, there is no need to compromise on your favorite model because of its high price. This way you can drive home a new car that might be out of your price range in case of purchase. Car leasing is becoming increasingly popular in many developed nations like US and UK. Auto dealers are offering better deals to attract more customers. Hence, we can lease from a wide range of latest models of various popular brands.

Low monthly payments
Purchasing a new car through finance leaves the consumer with huge monthly payments (installments), which he/she is supposed to pay until the tenure of the loan completes. Though leasing a car still needs some monthly payments, they are comparatively low. On an average, your lease payments will be 35% - 55% less compared to repayments on a new car loan.

Less or no maintenance
Another interesting thing about leased cars is that you can avoid the hassles of ownership as well maintenance costs. Almost all the leased cars are either new or nearly new vehicles, which are perfectly conditioned prior to the delivery. Hence, apart from routine maintenance checks, serious repairs are seldom required. In general, any major issues and expensive repairs crop up as the car ages. As your car lease is going to expire within 2-3 years max, nothing to worry about those repair costs.

Depreciation and resale
A car is always a depreciating asset which continuously loses its value from the moment you drive it home. Brand new and luxury cars often depreciate up to 60% in the first few years after purchase. Similarly, the resale value of those cars depends on their current condition, availability in the market and many other factors. On an average, they lose anywhere from 35% to 70% of their original value.

If you are taking a car on lease, you need not bother about the depreciating value of the car since the lessor (person who leases the vehicle) takes the risk of any unexpected depreciation in the value of the vehicle. Furthermore, since you will be returning the car to the dealer once the lease period completes, you need not worry about the selling hassles or resale value of the car.

You can buy it, if you like it
Many people get attached to the things they use for a significant period of time. Also, there are people who feel that buying something brought them luck. For those people, car lease offers the flexibility to own the same car, at any point of lease or after the lease, by paying the remaining balance which is called as 'residual value'. So, if you want to own your leased car, approach your dealer, negotiate the price and bring the car forever.

Though leasing is a new concept, it became popular as it favors people who do not want to use the same old car for long. However, it is better to know about the leasing process and approach a reliable dealer to get better leasing experience.

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Understanding the Critical Points of a Car Lease

While there are a number of benefits associated with leasing a car, there are also some critical points to keep in mind before ever signing one's name on the dotted line of a lease contract. A few elements of the technical jargon the owners of the vehicle may spew out at lessees may be so confusing that the customer walks away without a car or gets more than he or she bargained for. In times like this, it is critical that the person entering the lease understands the most critical points of a car lease and what each particular section means.

Statement of Disclosure
It is a Federal law that all vehicle leases have some sort of a statement of disclosure. There are also a variety of sub-categories that are required to be covered in the lease agreement. This way, the lessee knows exactly what he or she is dealing with, and from there can decide whether or not a particular lease agreement is a good deal or not. The statement of disclosure is the one part of the car lease that outlines elements such as how much the monthly payments will be, how much money is due upon signing, a statement about the penalties of early termination, an explanation about penalties related to wear and tear, and many other factors that essentially outline payments and other information about the vehicle.

Insurance Requirements
The next element of a car lease is the section devoted to insurance requirements. In a typical lease contract, one will see that there is a specific amount of coverage the lessee must carry in order to lease that particular vehicle. In most cases, companies would like to see those who enter into a vehicle lease carry $100,000 for death or liability insurance, $300,000 per occurrence, a property damage policy of $50,000 and no more than $500 for comprehensive and collision insurance.

Penalties for Damages
If the leased vehicle incurs too much wear and tear or is excessively damaged, there are often significant monetary penalties that the lessee must pay. This is because car dealerships expect the vehicle to be returned to them at the end of the leasing period with no more than an estimated amount of normal wear and tear. Anything considered to be above normal may be subject to inspection and immediate requirement of payment from the lessee. If the car is stolen, there is a fee for that as well, unless the lessee has gap coverage on the vehicle.

Penalties for Too Much Mileage
If the person leasing the vehicle drives it too often and puts an excessive amount of miles on the vehicle, he or she will be required to pay a significant monetary penalty to compensate for the mileage placed on the car.

Early Termination
Lessees who break the car lease agreement before the lease period is up may also be subject to a certain amount of monetary penalties including fines and fees for backing out of the contract early. This is generally the most damaging factor in a car lease.

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