7 Tips to Remember to Get the Best Car Lease Deal
For many drivers, leasing a car is the right financial choice for the season of life they are in. However, the key to making leasing the right choice is to know how and when to make the best deal. Here are seven tips to ensure you get the best deal on your leased vehicle.
Here is how car leasing works
According to the Credit Union of South Carolina, “leasing a car (or other motor vehicle) involves taking possession of a car for a fixed period of time (term), for a fixed amount of money as a monthly payment. Leasing is offered as an alternative to purchasing a car.”
The main difference between leasing and purchasing your car is that when you purchase a vehicle, it becomes your property when the loan is paid off. On the other hand, when you lease a car and the term ends, you must either purchase the vehicle by paying the residual value or return the car to the company.
There are a few perks to leasing a car:
- You have lower monthly payments with little to no down payment.
- You can drive a nice vehicle while paying less.
- You have lower repair costs thanks to the factory warranty.
- You can easily trade for a newer car every few years.
- You don’t have to deal with the issue of trading in your vehicle at the end of your term.
- You pay less sales tax.
There are also a few perks to purchasing a car. These include building equity with ownership. You can sell your vehicle anytime without being bound by some leasing agreement’s early termination clause. There is also no mileage limit on an owned vehicle; you can customize your car any way you desire.
Only you can decide if leasing is the right choice for you. If you do make the choice to lease, be sure you consider these seven tips so you can get the best deal.
1. Lease at the right time
There are certain times when you will find the best deals on leasing a vehicle. Look out for when a new model comes out. One of the best times to lease a car is right after a new model is introduced.
Dealers will also typically offer incentives during long holiday weekends. If you plan to lease, it could work to your advantage to wait till weekends such as President’s Day, Memorial Day, July 4th, Labor Day, and Thanksgiving.
Additionally, dealerships work hard to meet sales targets at the end of every month, quarter, and year. With the right timing, you could get a good deal.
2. Check your credit reports
All three major credit bureaus (Experian, Equifax, and Transunion) keep information on your credit history and use it to create your credit score. You are allowed to request one free credit score report every year under Federal law. You need to read through each credit report, note any potential errors, and then dispute those errors. Do this before you go to lease your car.
3. Improve your credit score
Checking your credit report for errors is very important because you never know what may accidentally appear on your account and affect your leasing power. You also need to pay all loans and credit cards on time. Paying on time will help to raise your credit score.
4. Avoid credit hard inquiries
A hard inquiry is made whenever you apply for a new credit card. Also, don’t close any lines of credit you aren’t using. Believe it or not, having those open lines of credit will help improve your credit utilization score, which accounts for upwards of 30% of your FICO score.
5. Be sure to comparison shop
Don’t lease the first car you see and like. Car dealerships are always providing incentives to keep cars moving off their lots. Shop around multiple dealerships for the vehicle you want, and don’t hesitate to negotiate. You could get a much bigger deal than you expected.
6. Don’t forget the fees
A leasing deal is going to come with its own share of costs. For example, you will likely see acquisition fees, a security deposit, a disposition fee, sales tax, and the first month’s payment. Always ask the leasing agent for a complete rundown of all costs you are expected to pay before signing the lease.
7. Understand the lease terms
Don’t be afraid to ask questions when meeting with the leasing agent. Be sure you understand every detail of the lease and all the terms within it.