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If you’re wondering what is car leasing, or how does leasing a vehicle work, then you’re in a good company to do business with. Not everyone is familiar with all the pros and cons of leasing a car. In fact, there are many auto leasing options available these days.
In the most basic terms, vehicle leasing is the rental of a car for a fixed period of time. Many car and truck dealers offer vehicle leasing as another option to traditional auto purchase or financing. It is commonly utilized by companies when acquiring business vehicles. In general, leasing a car costs less than buying a car, although there are several restrictions, such as vehicle mileage limits and non-customization agreements, that can determine whether it is better to lease or buy a vehicle.
Today we are going to look at our ten most frequently asked questions regarding vehicle leasing.
The benefits of leasing a car are unique. You cannot get them with other auto financing offers. Benefits like not having to trade or sell an old car or truck, lower payments, and maintenance provisions. For even more details on the benefits of auto leasing, our vehicle finance department is standing by to answer all of your questions.
The short answer to this question is: ‘it depends’. If you drive a lot of miles annual and like to keep your vehicles for longer than three years, leasing won’t be very beneficial for you. However, if you look forward to getting a new car, truck, or SUV every two to three years and have no interest in the trade-in/selling process of your current vehicle, you could be a prime candidate for an automotive lease. Essentially, the difference between auto leasing or buying really comes down to your personal, automotive and financial priorities.
Also, it is worth mentioning that some owners find high mileage leasing to be more beneficial in terms of financial safety and security than vehicle ownership. Statistically speaking, despite the overage fees you may pay when returning a high mileage leased vehicle, it is likely that you will come out ahead, compared to buying a car. High mileage causes a significant reduction at resale, but with leasing, it’s already taken in to consideration. Additionally, the more time you spend on the roads, the more susceptible to accidents you will be. Therefore, if or when that accident occurs on your own vehicle, you would receive wreck history on CarFax, as well as a resale/trade-in deduction for vehicle damage. With leasing, you are not responsible for the deduction in value from that accident.
Many manufacturers and dealerships offer zero-down lease offers. Of course, there are varying factors that qualify or disqualify customers from these types of leases. Factors like credit scores, credit payment history, etc. Just keep in mind that paying nothing down typically means bigger monthly payments. Auto leasing, like traditional auto financing, works like this: the bigger the down payment, the lower the monthly payment.
Yes, you actually can lease a used car. This type of ‘used car leasing’ is a little known ‘secret’ among car dealers but most do offer Certified Pre-Owned leasing specials on CPO vehicles less than four (4) years old and with fewer than 48,000 miles on the odometer.
Most auto leasing contracts have buy-out clauses in them in the event that you fall in love with your vehicle and would like to buy it. Keep in mind the purchase price of the vehicle may vary. This depends on the residual value of the vehicle after the lease agreement has expired. There are options to purchase your leased vehicle prior to the completion of the contract. For this, however, you will need to speak with a leasing manager. Only they can provide this exact info and take care of any early termination fees that may apply.
Normally a deposit is refundable at the conclusion of a lease. This assumes that all the leasing contract obligations have been met. Please note that a deposit (a.k.a. a security deposit) is not the same thing as a down payment. A down payment is not refundable but security deposits typically are. It is important to note some leases require non-refundable deposits. Therefore, read your lease agreement carefully and ask as many questions as you have before you sign on the dotted line.
While it is not impossible, it is difficult to lease a vehicle if you have a poor credit rating and no money for a down payment. Most zero-down lease offers require a healthy credit rating. But don’t worry, there are plenty of options available for car shoppers with less-than-stellar credit scores. To explore your leasing options, simply contact our financing team.
Generally speaking, a credit score of 619 or lower is classified as “subprime”. While this type of credit won’t typically be automatically declined, a 619 or lower credit score means you will most likely have to pay a higher interest rate and/or down payment. Luckily, there are various steps you can utilize to improve your credit score such as making on-time payments, consistent employment history, and applying for loans too many times.
Typically speaking, yes, you can trade in your leased vehicle at a different dealership. It must, however, be an authorized dealership for the vehicle manufacturer. It’s probably obvious, but you can’t turn a leased car into any other brand of dealership. You can, however, turn your leased Volkswagen into any authorized Volkswagen dealership across the nation. Again, assuming all your lease contract obligations have been fulfilled.
One of the more popular benefits of leasing a car is the maintenance provisions available in most lease agreements. Specifics may vary within individual lease contracts, but almost all leases will cover your leased vehicle’s normal maintenance and service needs. These include fluid and filter changes, normal tune-ups, and regularly scheduled maintenance typically do not cost the lessee anything out of pocket.
Do you have more questions about vehicle leasing, current promotions, or related topics? Then contact us today. Our team of leasing specialists are waiting to answer all your questions.
Vehicle Leasing 101 – Top Ten Car Lease FAQs | Volkswagen of Alamo Heights