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How to lease a car

What is an auto lease?

Auto leasing is a way of financing the use a vehicle for a pre-determined cost and pre-determined terms without actually "buying" or "owning" the vehicle. Unlike renting, where you can return the vehicle at any time, lease agreements discourage or prevent early termination. Leasing can be a great option for many consumers, but it is not for everyone. The people that are the best suited and qualified for the leasing option will:

  • Have good credit - Consumers with credit challenges will typically pay higher rates and monthly payments, or might not qualify for a lease at all.
  • Be stable - Having stable finances, lifestyle and employment eliminating the needing to terminate early. The most common issue with leasing arises when consumers need to terminate the lease early.
  • Typically purchase a new car every few years - For people that historically trade vehicles often, and like driving a different vehicle every few years, could benefit from leasing.
  • Drive a predictable, low number of miles each year - Lease contracts limit the number of miles per year - typically 10,000 to 15,000 annually. Go over the contracted mileage limit and incur excess mileage charges at the end of the lease.
  • Maintain and care for their cars well - Leasing contracts require that the vehicle is turned in at the end of the lease with nothing more than normal wear-and-tear. You have to pay for the damages for anything beyond normal. The consumer is responsible for all scheduled service and maintenance for the duration of the lease term.
  • Be able to fulfill a lease to the end of the term - Lease contracts discourage or even prevent early termination. If you terminate a lease early you will usually pay termination charges plus all remaining lease payments. Unlike renting a car, leasing is a financial contract similar to loans, and must be fulfilled according to the terms regardless of anything, including health issues and even death.
  • Want low monthly payments - Monthly lease payments are typically lower than financed auto loan payments. Leasing also allows you to get more car for less payment.
  • NOT modify or customize their car in any way - A leased car belongs to the leasing company. Any alterations, modifications or equipment changes are prohibited and you will be charged for the cost of restoring the vehicle to its original state.
  • NOT be attracted to trendy cars - Vehicles that are "hot", "stylish" or "popular". The "one-hit-wonders" of the car world can lose value very quickly. This causes the residual value to be lower. Low residual value means higher monthly lease payments.

  • Depreciation and Residual Value

    In an auto lease you pay the amount the value of the vehicle depreciates over the period of time leased. Depreciation is the vehicle value at the end of the lease term (called residual value) subtracted from the value at the beginning of the lease. This is the main consideration in determining the cost of the lease. Different vehicle makes and models have different depreciation rates. And the difference between them can be a lot, so you will want to research the vehicles you are interested in before signing a lease agreement. The lowest depreciation makes the best lease deals. Most new vehicle manufacturers offer leasing as an option, and most have special incentives and special rate lease deals that make available on various models periodically.

    Get Out of Your Lease with Online Lease Trading and Authorized Lease Transfers

    As we already mentioned, the most common complaint with leasing arises when consumers need to terminate the lease early. Lease agreements discourage or prevent early termination, regardless of the circumstances, and the lessee will incur large termination charges plus all remaining lease payments. The bottom line is that you are liable for the entire amount of the lease contract.

    HOWEVER, in recent years online marketplaces have developed to help people get out of a lease, or take over a lease after most of the costs have been incurred by the lessee. These market places allow you to shop and view available lease transfer vehicles online, contact the lessee directly (anonymously) apply for the transfer, and will assist you with the transfer process. Qualifying, including a credit approval, is required for those looking to take over a lease. These marketplaces make it very convenient for people that find themselves locked into a lease that they need to terminate early:

  • LeaseTrader.com
  • Swap a Lease
  • LeaseTrade

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