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Car leasing is a more affordable and flexible way to own a car temporarily. As banks continue to offer more options to consumers, car leasing is a popular trend that increased during the 2000s. It allows you to drive different car brands within a shorter timeframe without dealing with selling a car.
When you go shopping for a car lease, you must learn how to find the most affordable lease possible. You can implement specific tactics that can save you money and provide you with more options. All you need is the right education and guidance.
So that you know, these are not universal options. Certain car brands, dealerships, or leasing companies might not allow you to execute these options. As you read through them, pick out the ones which are likely to work with the dealerships you have in your local area. Contact the lender of finance officer of the dealerships to learn more.
Below are the top 5 strategies for getting affordable car leases.
Pay Several Security Deposits to Reduce the Interest Charges
Many leasing contracts require security deposits to be paid. The amount of one deposit is the equivalent of one monthly payment, but it will get rounded up to the next $50. For example, a $375 monthly payment would mean your security deposit is $400.
Sometimes a leasing company will give you a special deal where they'll lower your interest rate if you pay two or more security deposits upfront. The idea is that if you reduce the overall balance and duration of the lease, then it will reduce your monthly payments and interest rates.
But not all car brands or leasing companies will give you this option. Some of them might not allow you to make more than one or two security deposits because they want to keep the interest rates at a certain level.
Besides, a lot of leasing companies will promote low-interest leasing options already. There is really no need to pay more money upfront to get a lower interest rate.
If you don't mind paying the entire balance of your lease upfront, you could potentially eliminate all the interest charges. It depends on whether your leasing company will allow you to do this or not.
Let's look at an example of what you could do to implement this strategy. Suppose you were going to lease a vehicle without paying any money upfront. If your lease duration is 36 months and your monthly payments are $350, you would end up paying a total of $12,600 after three years with a standard interest rate.
On the other hand, if you paid the full balance of the lease upfront, your monthly payments would be $325. That is a $25 reduction in your monthly payments and approximately $900 in savings after 36 months.
Another reason to pay your lease upfront is if you cannot get approved for the lease. If you have a bad credit history or no credit history at all, for instance, then no leasing company will trust you to make the monthly payments. But if you pay the lease upfront, then it is obviously no longer a risk for the leasing company to approve you.
If the dealership offers a lease-to-buy option, you might want to consider taking it if you're testing the waters as you look to purchase a new vehicle in full. It'll allow you to pay the entire lease upfront on a car you might want to buy after the lease ends. But if it turns out you don't want to purchase the vehicle at that point, you can walk away without any further commitment.
The best advice is to contact the leasing company or finance officer and ask them a series of essential questions about this kind of leasing option. The questions could include the following:
- If I pay the entire balance of the lease upfront, how much money will I save in interest?
- If I pay the entire balance of the lease upfront and get into a big accident with the vehicle at some point afterward, will you refund the months I end up not using?
- If I want to end the lease early after paying the balance in full, will I get a refund on the payments I didn't use?
If you can receive honest answers to these questions, you'll better understand whether a full upfront payment on the lease is right for you.
Request a Month to Month Lease Extension After the Expiration Date
The pressure can pile up at the end of a lease. If you haven't chosen a new car yet, then you might have to choose one quickly. Then you could end up choosing a bad car that you won't like to drive.
Fortunately, many leasing companies will agree to extend your lease after it expires. That way, you'll have more time to choose a new car that you will like better. Sometimes you can receive a month-to-month extension, which is the most convenient because you can cancel anytime.
In other cases, though, the leasing companies will require the extension to be for a specific time period. It could be a 3-month extension or 6-month extension, for example. The extensions don't usually go past 12 months. The good news is your monthly payments do not change, neither will the number of miles per month you're given on the lease.
Whenever you want to extend your lease, call up the leasing company's lender and request an extension. It doesn't necessarily need to be a long extension, though. Many consumers only need an additional 5 to 10 days to select a new car. Negotiate with the lender and see what kind of extension they'll let you have.
When you want to terminate your lease without being penalized, it is possible to do so. It would be best if you found somebody else who is willing to take over your lease and accept its terms and conditions. If you are successful, then you won't be charged early termination fees by the dealership.
There are websites on the internet to help you find people to take over your lease. Of course, you will have to pay for this service, but it is far less money than the cost of the early termination fees. Websites like LeaseTrader and Swapalease are two useful websites to serve this purpose.
All you have to do is list your leased vehicle and wait for a new lessee to express interest in it. These companies will provide the necessary paperwork to you and the lessee so that you can get the lease takeover started. The staff members of these companies will explain the paperwork and answer your questions.
Once the lease is transferred, you might still have some liability. Leasing companies require the original leaseholder to carry post-transfer liability after someone else takes over the lease.
It is like the equivalent of being a co-signer for the new lessee, which means you'll be financially liable if the original lessee does not make their monthly payments. You'll also have to pay any additional fees they accumulate due to surplus mileage charges, vehicle damage, and end of lease fees.
Choose the Right Miles for You
The common belief is that car leasing is only good for people who don't drive very much. However, if you choose the right mileage for your lease agreement, you can still benefit if you do a lot of driving.
There are a couple of factors to consider. First, the vehicle brand you choose will determine whether the mileage limit on your lease is high or not. For instance, the standard mileage limit is 12,000 miles per year. But if you choose the right brand, you could get as many as 33,000 miles.
You might not see this many miles advertised on the leasing terms initially. But if you request to increase the mileage limit during your lease negotiations, the dealer will likely oblige your request. The only catch is that you'll have to pay more for the mileage increase. It will also increase your monthly payments as well.
However, the slightly higher monthly payments will end up saving you money compared to the penalty fees of exceeding your mileage limit. If you plan to do a lot of driving with your leased vehicle, then it is worth paying a higher monthly payment for more miles on your lease.
With that being said, you won't receive a refund on those added miles if you don't end up driving that much. So, make sure you plan on doing a lot of driving.