Simple Steps for Leasing a New Car

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November 9, 2016

Leasing a new car is like renting a car--except for a much longer period of time. Unlike a conventional new car purchase, you never actually own the leased vehicle and you'll be required to return the vehicle at the end of the lease. Over the past 20 years or so leasing has become extremely popular because of the ever-increasing price of new cars. Leasing offers a way for people to drive a new car and make smaller monthly car payments. Leasing is also a good option for people that want to change cars every 2 to 4 years. Therefore, here is a step-by-step guide to help you find a new car and lease it.

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Step 1 - Find Your New Car

Finding a vehicle for lease is much the same as searching for and finding a vehicle for a standard car purchase. Choose the method for shopping for a new vehicle that is most convenient for you and find the vehicle that you like best.

Step 2 - Check for Incentives or Special Lease Deals

Some car manufacturers offer lease specials quite often. Therefore, shopping for incentives will also help you save money on your lease deal. In fact, you will often see low lease payments advertised in your local newspaper as well as other automobile publications; however, always ask if the listed monthly payment amount includes sales tax and fees.

Also, you should ask if the advertised monthly lease payment requires a large down payment, which is often referred to as a Cap Reduction Payment or Cap Cost Reduction. Other incentives to look for are higher allowances for mileage as well as low bank fees and a low security deposit.

Step 3 - Choosing the Lease Term

When choosing a term for your lease, you will probably be presented with options for either 2, 3, 4 or 5 years. But, a 3-year lease is usually the best choice for most people. This is because most manufacturers offer a 3 year bumper-to-bumper warranty on new vehicles. So, if you lease a vehicle for a maximum of 3 years-your vehicle will always be covered under the manufacturer's warranty.

Step 4 - Estimate Your Payment

There are plenty of lease calculators available on the Internet that can help you determine how much a lease payment will cost you for a particular make and model vehicle. Websites like Kelley blue book and Edmunds provide leasing calculators that allow you to calculate lease payments based on the purchase price, lease length, interest rates and other required information. You can also use these calculators to create side-by-side comparisons to see if leasing the vehicle is actually a better option to buying.

Step 5 - Lease Your Car

Once you determine the car you want, and determine if the vehicle can be leased at a payment you can afford, go to the dealership of your choice and begin the leasing process. At the dealership you will be required to sign a lease contract for your new car as well as listen to the sales pitch by the finance manager offering you all types of extended service contracts, fabric protection, alarms or even a LoJack vehicle locator. However, in most cases you'll want to turn these down since you will never actually own the vehicle.

You should review the contract carefully to make sure that the lease payments, deposit amount and mileage allowance is what you expected. If all of the information is in order and appears to be correct, you can go ahead and sign the lease contract and some pay your down payment.

Step 5 - Get Gap Insurance

Also, while many people may try to tell you otherwise, for a lease, you should consider purchasing gap insurance on a leased vehicle. If the leased car is stolen or totaled in an accident there might be a considerable gap between what your insurance will pay you for the loss and the amount that you must submit to the leasing company to pay off the vehicle. Gap insurance will cover the difference in these 2 amounts for you and is relatively inexpensive.

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