Visit the Lease A Car Direct website to understand how our car brokers can help in beating the dealership price and get you a dream vehicle. The leasing broker has a wide network with top brands and funders. However, first, get familiar with the car leasing errors to stay away from.
Ignoring how the lease process works
Monthly payments for the lease will depend on the principal and the interest [based on credit score]. The principal is based on the depreciation value got from the model’s historic resale data. For example, the depreciation value of the Volvo S6 is 33%, whereas Audi A6 depreciates at 54.86% in 36 months. Thus, you can see even if the latter is a luxury vehicle it depreciates much faster, but the former holds its value.
Never underestimate the depreciation [residual] value. It is the key aspect that contributes to the monthly pricing. So, research before you decide on the car you desire to lease.
Misjudging your mileage
The mileage a customer will add to the vehicle is pre-determined. Generally, dealers suggest 10,000 – 20,000 m annually. Determine the kilometer you drive yearly because if you sign for 10,000 km yearly but you use 14,000 km then you will get an extra charge of around 0.30 per km. It means $1200 extra every year on the lease.
So, purchase an extra kilometer package from the start. Dealers will buy the unused mileage when you return the car on the expiry of the lease term. However, ask this and negotiate!
Go for early termination
Early termination is handled differently. If you promise 4 years, then stay committed. Some companies demand payments of the remaining months instantly on termination. Besides, several add a penalty charge. It means you will need to pay the remaining depreciation cost, so it is sensible to continue the car lease until the expiry.
Leasing too long
The warranty on new cars is around 3 – 4 years. You don’t desire to pay for maintenance after the car’s warranty expires. So, it is not logical to lease a car longer than 3-4 years. The concept of leasing is to consistently upgrade to a new car. Just check the car warranty before you commit!
Paying the large down payment
It is risky to pay a large down payment. For example, if the new car is totaled or stolen in the initial months, then the dealership will get reimbursed for damages, while you will not be responsible. Nevertheless, you will not be reimbursed for a down payment. Therefore, play safe and choose 15% as a down payment.
Buying the lease car on expiry of the terms
It is not bad if you have taken good care of the car. The residual value at lease term end is known, when you purchased the lease. After 3 to 4 years the car is possibly not under warranty, so you will need to pay for maintenance thereafter. It is logical to lease another vehicle.
Accepting the first deal
Never expect to get a vehicle and suitable deal within 5 minutes of search. Remember, if everything sounds so good, then be skeptical and ask questions. You are leasing a car and not buying a sandwich. No one can find an ideal car that fast.
Lack of negotiation
Negotiation is the most crucial part of the car leasing process. Annual mileage allowance and monthly payments are not the only two aspects. Take time to negotiate every aspect of residual value, MSRP, interest rates, etc. Never assume that some aspect is non-negotiable.
If you are trading then negotiate the trade-in car’s value. Be persistent and annoying. Ask questions! You will be surprised that you negotiated.