While there are many reasons why leasing a car can be beneficial, there are also reasons why it can be problematic. In any case, the first step for consumers is to review their budget to determine what payment amount is affordable. Debt management is essential and will ultimately allow you to improve your negotiation posture.
If you do not have a budget, now’s the time to create one by using the free financial management tools found at settleitsoft.com. You should also visit the site’s Knowledge Base where numerous videos covering all sorts of financial matters – from Budgeting Like A Pro and Identity Theft to Payday Loans and Wedding Planning – are available.
VEHICLE OWNERSHIP AND RESPONSIBILITIES
Meanwhile, let’s remember that leases do have their fair share of issues. First of all, the car does not belong to the person leasing the vehicle, it belongs to the auto dealership or leasing company. However, the person with the lease is usually completely responsible for the maintenance of the car.
A point many people bring up is that if the car is totaled in an accident and the insurance does not cover the full amount owed on the lease, the person leasing the car (the lessee) will owe the difference. There is Gap Insurance designed to pay for the difference, but the lessee needs to be aware if this insurance is included in the lease or if the lessee should obtain the insurance elsewhere. Another point: if the lessee wants to buy the car after the lease ends, he or she may end up spending more than if the car was purchased in the first place.
Other problems that arise with leases are fees. Going over on mileage is the most common complaint of lease contracts, because the dealership will charge a certain amount for every mile over the agreed upon amount. Also the ‘wear and tear’ clause in contracts is tricky, because in some ways it seems subjective,so it is important to make sure the car is in very good condition. Also, maintenance is extremely important as far as the engine is concerned. The lessee has to stay on top of regular maintenance in order to avoid those fees when returning the car at the end of the lease period.
CREDIT SCORE (FICO) IS AN IMPORTANT FACTOR
Another factor when looking at leasing is that credit plays an important role in determining whether a lease is a feasible option. People with better credit will have a better chance at getting a good deal on a lease. Checking credit scores is easy to do and can save time and hassle at a dealership.
On the plus side, a lease gives people the option of driving a car that would typically be out of their price range, while still enjoying a lower monthly payment. Also, a lease is a good alternative for drivers who are not interested in keeping a car long term as leases typically range anywhere from two to four years.
Vehicles have never been a “one size fits all” situation. That’s why dealerships offer a variety of options – both in the makes sold and ownership methods – to accommodate consumer desires. The important thing is to do the necessary research and understand the financial obligations involved with leasing (or owning) a vehicle.