Auto leasing gives you the chance to drive a brand-new vehicle without the large down payment or long-term commitment of a traditional purchase agreement. Many dealers also offer deals with low monthly payments to qualified drivers, making a lease seem even more attractive. However, there are some crucial points to consider before you take on the financial obligation of a car lease.
3 Things to Understand Before Leasing a Car
1. You’re Paying for the Depreciation
Instead of a purchase agreement, auto leasing is best thought of as a use contract. Leased vehicles are always new, so you are paying for the rapid depreciation of the vehicle, along with some interest. When the lease term expires, you can simply return the vehicle with no further obligation or convert the lease into a sale. However, bear in mind that long-term leases are typically more expensive than buying the car outright.
2. Leases Impact Your Credit Score
Auto dealers report leases to the credit agencies, just as they would any sale. Accepting the lease affects both your credit utilization and debt-to-income ratio, which could adversely affect your credit in the short-term. However, making regular lease payments on time will bring your credit back up again, possibly higher than it was before.
3. A Lease Can Be Negotiated
While many buyers know they can negotiate on the price and features of a car, many assume that lease offers are fixed. Auto dealerships are highly incentivized to sell or lease new cars, giving potential lessees a clear advantage in negotiations.
If you’re interested in leasing a new car but don’t know where to begin, let Optimum Auto Leasing in Glen Cove, NY, streamline the process for you. They specialize in helping people drive the car they’ve always wanted at prices they can afford and will walk you through every step of the process. Visit their website to browse their monthly specials, or call (800) 304-0100 to discuss your options and apply over the phone.