There comes that day and time when you are gazing out your window or casually mowing the front lawn and that brand-spanking new car swerves by. Then the thoughts creep in… “I want a car like that. Dang, that must be a lease! Should I get one?”. Before leasing a vehicle, there are a few things to consider to make the smartest financial decision. 

What is an Auto Lease?

First and foremost, you must think before you do. It can be helpful to go by the 24 to 72-hour rule. In other words, take some serious time to do your research! So, glad you are here. You landed in the right place.

According to the Federal Trade Commission Consumer Advice (FTC), an auto lease can be defined as a financial agreement where an individual pays to drive the vehicle but does not finance it.

In other words, when you choose to lease a vehicle you essentially gain the right to drive the car for so many miles for a certain time period.

The Benefits of Leasing a Vehicle

Choosing to lease a vehicle can be a great option if you cannot afford to purchase the vehicle in full or make monthly finance payments. This is because leasing is a bit different. One pro is the monthly payments are typically lower.

You are paying to simply borrow the car but not purchase it to own. Think of it like renting an apartment, house, or tools from Home Depot. You can use it for some time but unfortunately not keep it. However, when your lease is up, you have the option to finance to own if the lease agreement you signed states you can purchase it at the end of the lease period. Additional benefits of leasing a vehicle include: 

• Less cash is required upon purchasing a lease
• Lower maintenance costs
• No need to worry about turning around and reselling the depreciated vehicle
• You have the option to get a new vehicle every few years 
• There are plenty of vehicles to choose from

The Process Behind Leasing a Vehicle

If you are thinking about leasing a vehicle, the first thing to do is head to your desired dealership. Talking to an auto salesman to break down the entire process can be helpful. Suppose you don’t feel like going. Well, in this case, keep reading! 

The salesman may initially ask you what type of vehicle you have in mind. He may scroll down his computer and show you a few options or take you out in the lot to check them out in person. He may ask you what your monthly budget is for leasing a vehicle. At this point, this may determine the type of vehicle that you can afford. Then the fun part, you may be asked to test drive the vehicle. This is where he gets you!

If you like the chosen vehicle the salesman does a credit check. If you are approved, the salesman will ask about your preferred mileage limit, and discuss add-ons like windshield, dent, tire protection, and more. These add-ons can potentially save you tons of money down the road. For example, a windshield replacement can be well over a thousand dollars. Then you can select your chosen vehicle and the salesman will begin to generate a lease contract. Read BEFORE you sign. This is so important! The pressure is on but keep in mind you can back out at any time, be carless, borrow Uncle Sam’s car, and keep your old beater. 

Thinking Carefully Before Making a Decision

Now that you’ve done your much-needed research, you made it. You are sitting there thinking carefully about leasing a vehicle. This is where you think about the pros and the cons. Things to consider include: 

• Vehicle cost
• The down payment due before committing to the contract
• Leasing specials
• Insurance increase
• Gas mileage 
• Out-of-pocket or red carpet lease (RCL) fees & taxes
• Rent charge 
• Vehicle Residual Value
• End of Lease Requirements