7 questions to determine a good lease deal

If you have leashed a car earlier, it is hardly a concern getting on scoring away from a bad deal. However, new members looking to leash a vehicle who need to be made aware of the process have many questions. Interrogating with the dealer about certain car leash aspects will help you get a better deal on the first go.

There are many types to the lease agreement, but some elements determine if it is worth the risk. Asking the right questions will help evaluate an intelligent deal.

Let’s check seven ways to understand if the deal needs to be cracked.

1. Money Factor

The money Factor is a lease term and another word interpreted for interest rate. It works like a standard interest rate, and a lower number guarantees a low-interest rate.

Let us understand through an example. Money Factor looks like a number like 0.00145. To convert it into simple interest, it needs to be multiplied by 2400. The result will be the interest rate which in this case is 3.48%.It is essential to ask how much money Factor is being applied to your car lease policy. Converting it to an interest rate will allow you to evaluate if the rate is suitable according to your credit score.

2. Fees and Lease

The fee amount of the business car lease may differ depending on the brands and banks. Some fees may not be negotiable, but some could be reduced or removed. Most lease contracts operate on disposition and acquisition amounts, which stay nonnegotiable. You should keep an eye out for the security deposit and convince the leash dealer to waive it.

It is always a better call to know what charges are to add and what you are paying for in the contract. It will avoid any future surprises related to unexpected expenses.

3. Residual Value of the car

Residual value is the estimated amount of the vehicle after the car lease service has ended. It is an essential element for the base of any good lease contract. Generally, it is highlighted through the percentage of MSRP, i.e., the Manufacturer suggested retail price of the car.

Residual is necessary because it will determine how much you pay for the lease monthly. In this case, the higher the residual value, the lower your lease payment. It can be kept so that you will be paying the difference between the retail price and the car’s residual price through the lease’s tenure. So as the residual amount increases, the difference between them will decrease.

Let us work it through with an example.

You should get a lease for $10000 for a three-year duration and with a 60 percent residual value. So after the lease has ended, the car’s worth will remain $6000 (60% of $10000 is $6000). The difference amount of $4000 is what the lease will be based on. Division of $4000 by 36 months (I.e., 111) will be the monthly payment exclusive of taxes, extra fees, or interest.

So if the residual value goes down, the monthly payable amount goes up. It is always a must to ask the dealer about the residual value of any car you might be considering getting on lease.

4. Lease Special

Lease specials are a shortcut to saving money on leases. Some dealers and vehicle manufacturers offer discounts to take their sales up a notch. But be aware to check for any additional or hidden charges. Most of the time, the expressed amount does not include taxes or sign-up fees. Rest might require a higher credit score.

5. Miles on the print

You often end up cracking a great deal on the car lease, but then someone tells you the number of miles it offers. While some are okay with the limited miles, some drivers may request more depending on the driving frequency. It is always a must to make sure the lease offers miles enough as per the requirements before signing the agreement. There is also some low mileage lease that can be perked up for extra miles, although it may increase the amount to be paid monthly.

6. Cost of the car throughout the lease tenure.

Multiplying the number of months with the monthly payments, then adding additional charges such as taxes to the final amount. The result will be the amount that will be paid throughout the lease.

Even with lesser monthly payments, don’t assume that the vehicle owner will be yours at the end of the lease. It will still require the residual value to be paid to claim ownership.

7. Drive off fees Or Down payments

Drive-off fees are what a combination of a down payment and any additional charges are known to be. And like a traditional loan, if the down payment is significant, it will automatically lead to low monthly payments.

Even with wanting to pay as little as required for a down payment, like a traditional loan practice, spending a considerable amount initially may not be fruit-bearing in the long run.

There is no guarantee that the drive-off fees will be reimbursed to the insurance settlement in case of some mishaps. So there may be better choices than a large sum of down payment, especially when you spot a deal offering low monthly rates.

It is in the best interest to pay the first month’s payment in advance, along with the registration fee, to sign up for the lease. Allow the other charges to be added to the monthly costs, so it spreads out over the duration of the lease. It may increase the monthly payment, but the total sum of the lease stays unchanged.

Final Words

If you can derive answers to these questions, you have already acquired a clear picture considering the lease value. The dealer will understand that you have come prepared and have a stern hand on the critical aspects of signing up for a lease contract. A thoughtful consideration of the answers will enable a lease that saves on costs and offers a beautiful driving experience.