3 Big Costs Factors To Observe When Car Leasing
In many parts of the world, owning a car is like a necessity. But observing that there are less car owners than there are non-owners, it is hard to describe having your own vehicle as a necessity.
Bearing in mind that new cars depreciate the moment they are driven off the dealer’s parking lot, it is no wonder that there is a certain perception of wealth tied to car owners.
Never heard of it? Maybe that’s because you have one and the non-owners don’t talk about it in front of you.
So what happens when you really need a car but don’t have the money to buy it outright? You lease it of course! Leasing is like a long term car rental agreement.
Here are 3 costs factors to be mindful of to avoid being taken for a ride.
True finance costs involved
It can appear to the common man that the financial terms of a lease is simply a calculation of costs plus interest.
On the contrary, when was the last time you fully understood the terms of a contract concerning finances. Bank documents come to mind.
In fact, so long winded and all-encompassing are these documents that you probably won’t be surprised to find that you just agreed to be a slave for life should you default on any payment.
The good part is that leasing agreements are less confusing than your mortgage documents. Those can look as majestic as academic textbooks. But that does not mean that you can allow yourself to be complacent.
Make sure you understand the interest charges that you are liable for. Check for add-on fees that you have to pay, and all the penalty charges of unforeseen events. The problem commonly faced by people is that they know they ought to read every fine print meticulously. But few actually practice it.
In many circumstances, interest charges are minimal and negligible. But these are also the type of deals that will kill you on the add-ons and upsells.
See that little star* at the bottom of the page? That is the reference to a 200-page terms you are agreeing to.
Know what you are signing up for. If you have to, demand that the sales agent to explain key points to you. Sales staff are remunerated to serve you anyway.
Another key item that we seldom take notice of is the mileage you are allowed to drive before premium charges kick in. You will be even more of a victim if you are a new driver and have no idea how to estimate how much mileage you will drive within the period of the lease.
The average person will drive for no more than 10,000 kilometers every 6 months. And that is already a very prudent assumption.
So you need to ask yourself if your needs for the car is more demanding than the average driver. If your job requires you to drive around all the time, then the odds are that you are going to exceed the mileage limit of 10,000km/6months.
Anyway, if that is the case, your employer should be footing the bill.
What are the terms concerning mileage on your car lease?
If you need more miles, request for it. Getting a lease that takes those extra mileage into account will be more than worth it compared to the premium pricing for extra miles. If you play it cool at this point, you are going to shed some tears when you exceed the limit.
Read the news on million-dollar data roaming charges? Those real nightmares.
You need insurance to cover the gap between what you owe on your lease and the value of the car. This is because should the vehicle be stolen or destroyed while in your possession, you could very well be required to pay for it by the leasing company. This is fair.
To avoid the stress of this unlucky scenario, getting insurance to cover this gap will help you sleep better at night. You don’t want to be forced to buy the car with your own money when it is worth considerably less than the listed purchase price.