You may already be aware of some benefits of car leasing, and you probably have a few friends or acquaintances who have taken advantage of this option when it comes to driving around in a new vehicle. Leasing definitely has its advantages as it allows you to save your finances for other expenses rather than a big deposit. Additionally, at the end of the term of your lease (which can extend from two years to four years), you can just hand the vehicle back to the provider without worrying about how it has depreciated and without having to worry about how to sell it if you want a newer vehicle. But there are other considerations related to car leasing which you need to know, and if you have some questions as to monthly payments, other costs, and the like, here’s the real deal on car leasing: your top questions answered.
- How much will it cost per month?
Essentially speaking, car leasing is somewhat similar to buying your own vehicle because you will have to pay an initial deposit (equivalent to about three monthly payments), but this deposit is still less compared to buying your own car. You also have to factor in the monthly payments for the vehicle, depending on the make and model of the vehicle you choose. Monthly payments can start from as low as £100 to more than £400 based on how basic or high-end your vehicle is. The thing with leasing is that the monthly fees are supposed to cover the provider’s expenses on the car’s depreciation whilst you use it, plus profit. And this is why it is often cheaper to lease a higher-end model or a special edition vehicle because they hold their value better than standard vehicles.
- What will happen if I cannot pay?
If you miss one monthly payment, the provider will most likely contact you to see if you merely forgot to settle the fee. But if you miss a payment more than once, you will be marked as default, and the provider may begin charging late payment fees. If this goes on, however, the provider will get the vehicle back, and you may also get a default marking on your credit score, which could affect your chances of getting other credit or a mortgage in the future.
- How can I keep my monthly payments down?
If you are concerned about sticking to a certain budget and would like to keep your monthly payments as low as possible, then try to see if you can stick to the basics and not add any extras. For instance, if you want a specific shade of paint or allow wheels, you will undoubtedly increase your monthly payments. Of course, you can always go for a cheaper model if you would really like to keep your costs down, as recommended by car leasing specialists like www.genusleasing.com.
How does a lease deal affect my credit score or rating?
If you apply for a lease deal, the lender performs a check on your credit history to see if you qualify. The check will show up on your credit record as a credit application. But a credit check for a car lease deal isn’t as strict as for a personal loan, because financing is already secured on the vehicle itself. In other words, if you cannot pay, then the provider will simply repossess the vehicle rather than chase you for payments as would be done with a personal loan.
Are there other costs I have to settle at the end of the term?
One excellent aspect of car leasing is that you don’t have to pay anything else once your lease deal is finished. If you exceed your mileage limit, you may have to pay extra fees, and if you damage the car, you will have to pay for it, otherwise, there are no other expenses associated with the deal once it has ended.