What to Look for When Leasing a Car

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


, - July 5, 2018

Leasing can be a great option for people who aren’t ready to make a long-term commitment to a vehicle. But, there are a lot of things you need to consider before you dive into a lease.

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Leasing Basics

When you lease you’re just paying for the value of the vehicle during the time you’re using it. There are two main possible negotiable amounts you need to be aware of in leasing: the capitalized cost, or cap cost, and the money factor.

The cap cost is the negotiated selling price of the vehicle plus any additional fees. Unlike retail financing, a down payment won’t help you save money on a lease. This is because a lease down payment is really a cap cost reduction – essentially a pre-payment. If you go this route, however, be careful about how much you pre-pay. If you terminate your lease early, or the car is totaled in an accident, you won’t get this money back.

The money factor, which is essentially the interest rate on a lease, is always shown as a decimal and can be influenced by your credit score. Once you’ve gotten the money factor from the lessor, you can find out the interest rate it represents by multiplying it by 2,400. For example, if the money factor is .00145, you multiply it by 2,400 to get the interest rate of 3.48 percent.

The draw of leasing is often getting a new car every two to three years. But leasing isn’t the best option for everyone. If you travel for work, or have a long daily commute, it may not be worth the cost of extra mileage just to have a new vehicle every 36 months. In some cases, financing an auto loan for a short time may better in the long run.

Car Leasing Tips and Tricks

If you’ve decided leasing is the best option for you, make sure you get the most value for your money. Here are some tips to use when you’re considering car leasing:

  • Know how well the vehicle you’re leasing holds its value. The better the residual value, the less you’re likely to end up paying per month for your lease.
  • Make sure your lease includes enough miles. Going over mileage on your lease can rack up big fees. Lessors generally charge 25 cents or more for every mile over your limit.
  • Know where your credit stands and what the typical interest rates are for that score. Because this is often negotiable in leasing, you need to be prepared to calculate your interest rate from the dealer’s money factor, and know if you’re getting a fair deal.
  • Ask about special lease deals. Just because a deal isn’t advertised doesn’t mean it doesn’t exist. It never hurts to ask for the best deal you can get.

Let Us Help You

Not everyone qualifies for leasing. It’s harder to do so if you’re struggling with credit challenges, but it’s sometimes possible if you find the right leasing company. If you don’t think leasing will work for you due to bad credit, don’t give up. You may qualify for a car loan if you finance through a special finance dealer.

At CarsDirect, we work with a nationwide network of special finance dealers that have lenders available to assist people in many credit situations. Find out which dealer we can match you with by filling out our online auto loan request form today!

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


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