Leasing a car rather than buying is an option usually taken up by those who prefer to drive the newest models, without having to pay a large sum to own the vehicle.
In the long term the cost of leasing a car can end up higher than that of buying a car, but there are many benefits to leasing;
- The monthly costs don’t change so you can budget out the entire period of the lease
- Leasing a new car under warranty will minimise your maintenance costs
- You get to drive the latest model without a hefty outlay
- You don’t have to arrange and negotiate the sale of the vehicle when you want to upgrade
But for those new to leasing can find it rather confusing, especially in how to get started.
How to lease a car
With a car lease you will usually start out by finding the vehicle you want then talking to a financier.
The financier will then purchase the vehicle and arrange a lease contract for you.
With most car leases you make a small down payment (less than that of a 20% car deposit), then regular monthly payments for the term of the lease, which can be anywhere from 2 to 5 years. The conditions and interest rates will differ depending on your individual circumstances.
At the end of the lease period you either return the car, extend the lease, or take out a new lease for a newer vehicle. In some lease contracts there will also be a “residual value” option, whereby a final agreed payment transfers ownership of the vehicle to you.
While leasing a car can be the best scenario to suit your needs and wants, it’s important to avoid some of the common car leasing mistakes.
Car leasing mistakes
Not considering your travelling distances; a car lease contract will usually set out the maximum distance you can travel in your car over the lease term. There can be hefty fees for going over this so make sure you know how much you’re likely to use the vehicle. If you’re planning an epic road trip around Australia a lease may not be the best option for you.
Damage: just because the car doesn’t actually belong to you doesn’t mean you don’t have to look after it. Damage beyond normal wear and tear can also result in extra fees at the end of your lease agreement.
Leasing for too long: consider how long it will take to go over your new car’s extended warranty period. You’re leasing a car to avoid all the ongoing maintenance costs so make sure your lease agreement is short enough that you’ll hand the vehicle back in before you start paying for new tires, brakes and other maintenance costs.
At Aussie Car Loans we have years of experience in matching people with car leases to best suit their needs. Talk to us today to discuss your lease options so you can start looking for the car you want today.
