Pros and cons of leasing a car

Pros

Many people lease cars because of multiple reasons.

  • They enjoy driving a new vehicle that maintains its warranty across the lease period. Therefore, the car hardly needs more than its routine maintenance.
  • Monthly payments are normally small than the purchased option because it is based on depreciation in vehicle value across the lease period instead of the overall value.
  • Drivers get to lease nicer and expensive cars than they can afford to buy.
  • Lower monthly payments.
  • Lower out of pocket costs when acquiring and maintaining the vehicle.

Visit our car lease specials page to see the list of cars offered on lease for drivers around South Florida to enjoy!

Cons

  • The lessee will be locked in to the vehicle for the duration of the lease term.
  • The lessee has to return the car as the contract period ends without any expectation of getting equity.

The choice depends on the driver’s preference and unique needs.

How lease a car process works?

Calculating the cost of leasing a car is complex, so understand the basic terms used in the lease contract. Common terms you will come across in the lease process are as follows.

MSRP [Manufacturer’s suggested retail price]

It is the new vehicle’s full price [sticker price]. In rare cases, you can negotiate the MSRP because it is just a suggested price.

Cap cost

Capitalized cost is the base price, which you can negotiate down from MSRP. It is also called the ‘lease price’. Don’t let the dealer know you desire to lease until this cost gets determined. Dealer may even tell you that MSRP cannot get negotiated if you want to lease, don’t fall for it.

Cap price along with any other figure popping in the lease process is negotiable. Research and be prepared to negotiate the price of the car you plan to get. It reduces the monthly payments you will make.

Residual value

It is the car’s value at the end of the lease period. Lessors estimate is based on data associated with historical resale value.

Depreciation

It is the difference between the new car value and residual value. It is the part that influences the monthly payment of the lease.

Lease rate or money factor

It is an interest rate and is expressed differently. When you lease a car from a leasing broker, it is the latter buying the car from the dealer and leasing it to you Money factor also influences the monthly lease payments. The lessor charges you for tying their capital during the lease period. The money factor depends more on the lessee’s credit score just like bank interest rates.

Mileage allowance & charges

It is expressed in a max number of miles the lessee can drive every year and is termed as mileage allowance. If the lessee exceeds the maximum number, they get charged an extra fee per mileage.

Lease terms, purchase option agreement, upfront fees, and default charges also need to get known. So before you negotiate set a budget, know your mileage, credit score, trade-in value, and more to make an educated decision.