Given that most millennials will never own their own home, it is perhaps unsurprising that leasing a vehicle is becoming the popular choice among 18-35 year-olds. In fact, millennials are leasing 46% more cars than they were five years ago. Leasing a vehicle means they can access a vehicle when they need it and don’t have to pay the potentially expensive costs involved in actually owning their own vehicle.
If you’ve been debating the merits of buying a car outright, it is worth looking at the leasing option, which might be a much better choice for you. Below is everything you need to know about leasing a vehicle.
Let’s start with the most obvious question of all – what exactly is leasing? In the simplest terms, leasing is the long-term rental of a vehicle. Just as more people are now renting instead of buying a home outright, so are many people choosing to rent their vehicles instead of buying them. When you take out a lease, you agree to pay a monthly fee to use the car for a set number of miles and/or for a set amount of time.
In order to lease a car, you will need to pass a credit check. This is because the company leasing the vehicle to you is essentially lending you the money for it, which you are repaying, month by month. If you have a mobile phone contract, this works along the same principles.
There are a number of benefits to leasing a vehicle and many people take this route for reasons other than the financial savings when compared to purchasing a vehicle outright.
First of all, when you lease a vehicle, you won’t have to worry about paying for repairs owing to wear and tear. However, most problems that arise that aren’t caused by user error will be covered by the vehicle’s warranty.
The monthly costs involved in a car lease are much lower than the monthly payments you’d make on a car that you were buying outright. This makes high-end and more luxurious vehicles available to customers for a similar overall cost as a more typical mid-range car.
Once your lease is up, you can hand the keys back and be done with the vehicle; you don’t have to worry about selling it or disposing of it. Leasing a new vehicle every couple of years means you will always be driving the latest model with the latest technology.
Just like when you buy a car normally, you have a number of options available to you in terms of financing your lease. Even though the cost of leasing a vehicle is much lower than purchasing it, it is still important to make sure that you are prepared financially for the commitment you are about to make. Before you approach a car leasing company make sure you have worked out how much you can afford to pay monthly.
If your credit score isn’t very good, you might find it difficult to lease a vehicle. If you are having trouble leasing because of your credit score, the first thing you should do is try and bring your score up. You can request a credit report so you can see exactly where you owe money and to whom. Once you have raised your credit score, leasing becomes much easier.
Because a leased vehicle is, for all intents and purposes, a rented vehicle, you need to ensure that you keep it well maintained. The vehicle’s warranty should cover the costs of any repairs that need doing, but you can be charged extra if you fail to keep the car in proper condition. Remember, when you hand the vehicle back, the leasing company may want to lease it out again. They will, therefore, penalise you for any damage, even minor cosmetic damage.
You should also keep in mind the number of miles you have agreed according to your lease contract. If you go over your mileage limit, you will be charged extra, with penalties varying between providers.
You can massively reduce the risks involved by leasing from a business with a solid reputation. For example, Zen Auto offers personal car leasing and there’s no shortage of positive reviews for the business online. They also are much more flexible about their payment plans than some other companies. We would recommend checking them out, even if only to get a feel for what a legitimate leasing business looks like.
It is important that you carefully study your lease agreement. Make sure that you understand everything in it and ask about any points that aren’t clear to you.
As with any contract that you enter into, you will be expected to uphold your end of the contract for its full duration. If you terminate the contract early and try to turn your vehicle back in before the lease is up, you will have to pay a penalty which could be quite costly. Early termination usually requires you to pay the rest of what you owe, potentially wasting a huge amount of money in the process.
Some businesses will allow you to transfer the lease to someone else, with their agreement, of course, and they will assume responsibility for the payments. However, this is rarely a simple and painless process.
Leasing a car is an excellent option for cash-strapped millennials and anyone else who would like to save money on their car ownership. If you want to drive a new car but don’t have the funds to splash out on buying a high-end car, leasing enables you to access these vehicles for a fraction of the usual cost.