Knowing the in’s and out’s of leasing could save you money!
*as adapted from an Edmunds.com article. To read the full article, visit: http://www.edmunds.com/car-leasing/5-car-lease-strategies-you-didnt-know-about.html*
A lease contract can be both economical and flexible if you know the options that are available to customize the contract to your personal situation and budget.
As leasing grows in popularity, banks offer more finance options to serve a broader range of shoppers. However, only experts know many of these strategies. Furthermore, the rules of leasing programs are always changing, and not all lenders offer these options.
Here are five leasing strategies that can cut costs and customize leasing for your individual situation.
1. Make multiple REFUNDABLE security deposits to reduce your interest rate.
In most leasing contracts, the security deposit (if there is one) is equal to one month’s payment rounded up to the nearest $50. So, if your monthly payment is $425, the security deposit is $450. If you agree to pay two or more fully refundable security deposits, the leasing company reduces the interest rate because its risk is lower. A lower money factor means a reduced monthly payment.
This option isn’t available for all leasing programs, and many lenders limit the number of security deposits that you can use. However, if you have the money and you are not investing it, this strategy can sometimes save $1,000 or more over the three years of the lease.
2. Take advantage of a One-Pay Lease
A similar strategy to the multiple security deposits is the one-pay lease. A major benefit of leasing is that you know exactly what your total automotive expenses are for the length of the lease. In a one-pay lease you make all the payments upfront, and the leasing company reduces your interest rate in return for their having all of the money owed to them at the onset of the lease. By taking advantage of a lower interest rate, the overall cost of the lease decreases, sometimes drastically.
3. Continue your lease month-to-month until you are ready to get your next car.
Some people panic as the end of their lease approaches because they don’t know what car they will get next, but many leasing companies will allow you to keep the car on a month-to-month basis which can buy you time when it comes to your decision making process about your next car. Be mindful here, however, of registration and other fees that may come as a result of extending your lease.
4. It’s easier than you think to transfer your lease before the end of the contract.
According to SwapaLease, it is possible to transfer about 80 percent of leases with no strings attached. SwapaLease and its rival LeaseTrader connect lessees with people to take over the lease and, for a fee, handle the paperwork.
5. Customize the mileage to suit your needs.
Often, people say “‘I can’t lease because I drive too many miles.” Most people know that traditional leases are limited to 10k, 12k and 15k miles per year. Some lenders, though, are now offering leases with as low as 7500 miles per year. And, for those that do drive more than 15k miles per year, leases can be customized to any number of miles driven/allowed per year.