Leasing a vehicle is an increasingly popular option. A large portion of the new vehicles that hit the street everyday are actually leased instead of purchased. Leasing a vehicle allows you access to a brand-new vehicle for a few years that you really don't have to worry about, as the dealership will take care of all maintenance and repair needs that come up, which should not be very many, as you are leasing a new vehicle and are essentially the first "owner" of the car.
Leasing a vehicle can be a great way to get into a new vehicle. When leasing a vehicle though, there are a few classic mistakes you want to avoid.
Classic Mistake #1: Putting Down Too Much Money Upfront
Unlike when you purchase a car, where the more you put down the less you will pay over the life of the loan, when you lease a vehicle, you actually want to put as little down as possible.
The money that you put down when you lease a vehicle will be spread out over the life of your lease and will reduce the amount that you have to pay every month. However, if something happens, such as the car is damaged or stolen, or you just decide you want to terminate the lease early, you will not get back the money that you put down for the vehicle.
When it comes to leasing a vehicle, it is often better to put down less upfront and pay a little more each month. That way, you are really paying for what you are using.
Classic Mistake #2: Not Getting Gap Insurance
When you lease a vehicle, you are still responsible for the care of the vehicle. You are expected to carry insurance on the vehicle, and you are responsible for the replacement cost of the vehicle if it is totaled in an accident.
Gap insurance is designed to fill in the "gap" between what your insurance company says the car is worth and what the dealership says the car is worth in the event of an accident. Having gap insurance can save you thousands of dollars. For example, if your vehicle is involved in a car accident and the insurance determines that your vehicle is totaled and only worth $10,000, but the dealership agreement would require you to pay them $14,000 for the vehicle, your gap insurance will pay the additional $4,000 over the value of the vehicle to cover what you owe the dealership. Without gap insurance, you would have to pay that $4,000 to the dealership out of your own pocket.
When you lease a vehicle, don't put down too much money upfront. Go for higher monthly payments where you are only paying for what you are actually using. Second, always get gap insurance, because if the vehicle is totaled, you are responsible for paying the dealership back for the vehicle. Keep these tips in mind as you visit luxury car dealerships to lease a car.