So you’re thinking about leasing a car. This can be a fantastic decision for you depending on your circumstances, and in certain ones, makes much more sense than buying a car outright. Leasing a car enables you to have access to a car, without having to pay a hefty sum up-front.
Here are some common questions asked about leasing a car:
1) Is it better than buying?
This really depends on your circumstances; it’s similar to whether buying a property is better than renting. If you’re looking for a mid-term solution, for example, you are only moving to a country for a year or two, leasing would be a better solution than buying as you’ll only need the car while you’re there. If however, you’re deciding to grow a family with your partner, then leasing may present more problems than buying!
2) How do residual values work?
Residual values on a car are how much the car will be worth as the car gets older and used more. These are normally taken into account with the leasing price so that the car’s leaser doesn’t lose out from depreceiation of the car. CreditPlus have a very good explainer on this!
3) How is sales tax applied to lease?
This very much depends on your state’s tax laws, so it’s always a very good idea to check those first! The simplest way to think about it however, is that the base rate of sales tax applies to each monthly payment, as opposed to the whole lease. So you’ll multiply the sales tax for each month and add it onto that payment. There are many exemptions and details however, and the Sales Tax Institute has a good guide on what the exemptions are here.
4) Which parts of a lease are negotiable?
Normally the terms that are most negotiable are financial: The down payment on the lease, the buy-out option and the cost of the lease per month. The others you can negotiate are: time spent leasing the car, the mileage limit and any incentives or discount you can get.
5) What if I want to end the lease early?
Ending your car lease early can be a problem. While most leases enable you to end the contract early, all of them will have penalties and disincentives to lower the risk of you doing so. In most cases, you will have to pay the remainder of the lease amount, a termination fee, costs of cleaning and preparing the car for another sale and others besides. You should always check the contract before you sign for terms of early termination to know your rights.
6) All questions are answered on ICL leasing guide!
We’ve tried to answer most of your questions in this article, but if you have more, then you can find a great guide on the Intelligent Car Leasing site! So go and pop over to them to do your research on leasing!
