Lease Terms You Need To Know Before You Lease A Car

When it’s time to lease a car, it’s important to have a sound understanding of what you’re getting yourself into, what sort of payments you’re willing to fit into the budget, the amount of miles you’re willing to give up for the car, and most importantly the car lease terms you need to know in order to get the most out of your lease. Whether you’re looking for Ford, Chrysler, Dodge, or Chevy lease deals, here are some important tips you need to know before you go into the leasing office and sign on the dotted line.

Length Of Car Lease Terms

Typical car lease terms are anywhere between a year to three years, depending on what you plan on using the vehicle for and where. This typically involves plans as short as 12 months and lease plans that extend up to or beyond 36 months. If you’re just in need of a quick ride to carry out errands while you save up for another car, you might lease a vehicle for a year to handle the basics.

For longer-term contracts, such as the ones that stretch into two and three years, you might require the vehicle for a specific task or want to get the feel of a certain car to see if you would be willing to buy it after putting a bit of wear and tear on it. Some potential car owners might lease a vehicle for work purposes while they take up a contract job in another state, or some might consider leasing a vehicle for a couple of years while another vehicle undergoes long-term maintenance or repairs.

Lease Term Costs

Depending on what you’ll need the car for will determine how long your lease term should be. Also, consider that longer leases will work out in your favor in terms of lowering the costs. Shorter leases will be more expensive but may come with fewer penalties at the end of the term.

Your lease terms may also be impacted by your credit score, with lower credit scores making it more difficult for some car shoppers to land a hot deal on a leased car. If your credit score isn’t so great, but you’re backed into a corner to lease a car instead of buying, then you could go with a longer-term leasing deal to cut down on the monthly costs and help shave a few bucks off your expenses.

Bargaining For Better Lease Terms

Just because a lease is a contract doesn’t mean it’s always “take it or leave it” when it comes to haggling for a better deal. You can actually negotiate based on what works best for you and what won’t drive the dealer into a stonewall. Before talking with a dealer or heading out to make a snap judgment and pick up a Cadillac, Ram, Toyota, or Chevy lease deal because you panicked or felt pressured, make sure you go over what exactly your term limits will be and what you’re willing to bend for and what you’re not. For instance, it might be wise to negotiate the dealer preparation fee out of the leasing deal to avoid paying extra.

At the end of the day, it’s your money, and you need to make sure that you’re willing to negotiate for the best deal for what’s in your bank account. What you don’t want to do is let the dealer set all the terms, and you just end up in a pliable nod even when lease terms don’t benefit you.

Car Lease Term Fees

Some of the car lease terms you need to know about involve fees. It’s easy to think that it’s just about the buyer and the dealer, but it can sometimes involve a bank, too. If the vehicle being leased isn’t owned by a dealership but rather the bank, then an acquisition fee is sometimes charged. You can attempt to negotiate the fee if you think it may be a little too high for your tastes. Some fees are designed to reduce the overall monthly costs, such as down payment fees, first month’s payment fees, and security deposit fees.

Keep in mind that all fees related to the leasing term must be disclosed in the contract and made available upfront to potential lessees as part of the Consumer Leasing Act. So before you sign, make sure you scour the contract for any fees the dealer or lessor may not have openly informed you about, and see if you can negotiate a waiver on some of them.

Limited Leases and Leasing To Buy

Different kinds of leasing terms sometimes offer different incentives or clauses depending on whether you’re leasing to buy or leasing as a one-time deal. A lease where you pay monthly fees on a car but aren’t obligated to actually buy the car at the end of the lease can work out well if you find a better deal or realize the leased car isn’t right for you. However, that option can sometimes go away if you enter into an open-end lease deal.

An open-end lease is where the lessee, or consumer, ends up paying the difference between the car’s actual value and the residual value at the end of lease. The benefit of this kind of deal is that typically if you can keep the costs of depreciation low by the time the lease is up, then the lease ends with no penalty.

The issue with an open-end lease is that the depreciation factor – which is determined by the vehicle’s specifications and the projected mileage put on it by the lessee – can work against the lessee if, by the end of the lease, the worth of the vehicle is less than its book value. If the lessee manages to put more miles on the vehicle than what was in the terms, or the depreciation is too high, then the lessee must pay the difference between the residual value and the market value of the vehicle, or purchase the vehicle.

The closed-end lease is a lot more generous toward consumers who may not be able to navigate the more complex and strict terms of an open-end lease. The closed-end lease keeps the option open for lessees to purchase the vehicle at the end of the lease, or walk away from the car once the lease ends. Unlike the open-end lease, you’re not obligated to purchase the vehicle even if you put a lot of wear and tear on the car.

Oftentimes, the lessee can pay the difference between the residual value of the vehicle (which is whatever was paid on the car during the term of the lease) and the market value of the car. So if the car has an MSRP of $16,000, and you put $10,000 into the car over a multi-year leasing contract, then by the end of the contract, you can pay the $6,000 difference to purchase the car or bargain with the dealer in hopes of paying a lower price.

Leasing Deals For You

You came into this article curious about what car lease terms you need to know about, and hopefully, you’ve come away with a little bit of knowledge under your belt when it comes to leasing a vehicle.
The most important thing to remember is that most fees can be negotiated, and most prices can be haggled down to something a little more manageable for your budget. However, a lot of this does depend on the dealer, the finance company, the bank, and the vehicle you’re trying to lease.

If the price of a vehicle still seems a little steep in the leasing contract, don’t be afraid to look for ways to have fees waived or monthly charges brought down, even if it means extending the length of the lease. If you still have questions, our finance team at DePaula Chevy in Albany is ready to help you secure your next lease. Visit us at 785 Central Ave in Albany, NY today!