Common Leasing Mistakes
Consumers are our #1 priority here at Tristate Auto Champs. As your personal auto concierge it is our duty to give you the tools needed to get the best car deals
. Today we are bringing you another blog for our leasing series. Enjoy our tips to help you on your next auto lease. With the help of this blog and just a few minor adjustments, you can avoid making these common mistakes.
Consumers who lease a car usually do it because they have the chance to drive a newer car sooner, along with keeping a lower cost of ownership over a 3 year period. One of the keys to our success is offering the facts to our customers, and allowing them to make the right decision.
The first tip is for buyers to read the fine print before signing a contract. All lease contracts are legal loan documents, which bind you to the lienholder for a pre-determined period of time. Today’s leases are called “Closed-Ended”, which means you can’t change the contract nor can the bank. The agreed upon figures and wordage during your lease are set once both the lessor and lessee sign the lease agreement. This is a benefit for our customers because then you know what the fixed cost of ownership entails. Another benefit of closed-end leases is that you simply turn the vehicle in at the end of the lease, with the option to buy the car for the predetermined residual value.
Reading the fine print is vital, no matter how tedious the task might be. This is so important, especially when it comes to lease termination. The easiest solution is to have the experts at Tristate Auto Champs look over the paperwork prior to signing anything. We are your advocates, and ensure everything that was agreed upon gets delivered.
When leasing a car, people often forget what to negotiate and in what order. Our simple format is to always negotiate the cost of the vehicle first, also called the capitalized cost. Many manufactures advertise unrealistically low payments to distract consumers from the many other profit centers in a car lease. Getting too focused on monthly payment is a very costly mistake.
Some leases by the manufacturer have specific terms, but most leases are completely negotiable. Tristate Auto Champs recommends you do research online to determine a fair price for the car. Then, use your research as a platform for negotiating with dealerships. Or you can just call us
and allow our expert team to take care of everything, and get you the best price guaranteed.
Another great benefit of leasing is the low cost of upfront money needed versus a traditional auto loan. Manufactures advertise low monthly car-lease payments on new cars, but consumers are usually asked to pay several thousand dollars at the start of the term to get the rock-bottom payments.
Which brings up to our next mistake to avoid. We highly suggest that our clients not pay more than about $2,500 in advance. The goal here should be to put nothing down based on the risk of losing any pre-paid payments. We will go more into detail about this later on in this blog. With less money paid upfront, the monthly payment will be higher. But customers can take those “prepayment” dollars and put it into an interest-bearing account instead.
We cannot say every lease company includes GAP Insurance. Customers should verify by reading the lease contract or asking the experts are Tristate Auto Champs. This is a very important coverage that you should have on every leased vehicle.
We said we would explain why we advise our customers to use the “less is more” philosophy when dealing with cash down on new car leases. The biggest reason is that the value of all new cars drops significantly after it’s driven off the lot…leased vehicles are no exception to this rule.
If your leased car is stolen or totaled during your ownership of the lease, your auto insurance company will make a payment for the current value of the car. That amount typically does not cover the total obligation under the terms of the lease. This is where gap insurance comes in. If you have it, the insurance company pays for the difference. If not, you pay out of pocket.
Here is the good news if you followed our leasing blog series: by not putting too much money down upfront you won’t lose that cash. Earlier we advised to verify that your lease included Gap Insurance, because in this horrible tragedy, the silver lining is Gap Insurance would cover the “Gap” between the car’s value and the lease obligation In short you would walk away owing the lessor $0.00.
Our final mistake to avoid when leasing is in regard to mileage limits. Be sure to calculate the correct miles per year you will be driving. It is easy to get caught up in emotion and opt for fewer miles than you need for a friendly monthly payment. Car salesmen are trained to take advantage of this. Before you go to the dealer, take a pen to paper and write out how many miles per year you need to drive for work. Then add the “fun driving” you will be doing. Account for the vacations you drive to like the beach or theme parks. By following this formula, you will never have to worry about paying for over mileage.
It’s common for leasing contracts to have mileage limits disclosed per year. You can find a few with 7,500 miles, but the most common leasing ads have an allowance of 10,000 miles per year. The most common leases we see for our customers have a per-year mileage limit of 10,000-15,000 miles. If you exceed the limits of your contract, you will be charged by the leasing company for an additional 10 to 30 cents per mile. That charge is located on the lease agreement, that’s why we recommend reading the fine print.
Be sure to contact an expert who has only your best interest in mind such as a close friend, family member, or a professional car expert from Tristate Auto Champs. There are many different ways to get the best lease deal –ask us how!