While buying a car is a no-brainer for some, for other drivers it’s not necessarily the best option. For instance, what if you need a car but don’t have thousands of dollars saved up for a down payment? Your options in this case would either be to buy used, or to lease a new car for a designated amount of time. Leasing tends to be shorter-term and more flexible than outright buying a car, making it an appealing option for drivers who want new design and safety features without a five-year (or longer) commitment.
Just like buying, the leasing process begins before actual negotiations and test drives take place. Here’s more on how you can set yourself up for success before you even visit the dealership.
Find the Vehicle You Want to Lease
Just like when it comes to buying, the first step is determining which vehicle would be the best fit for your lifestyle and budget.
Some drivers have extremely specific taste and expectations for their vehicle. For instance, someone with a long commute to work would likely want to choose a fuel-efficient vehicle to keep gas costs low. Someone seeking a vehicle that will make a good impression on coworkers and clients may opt for an upscale sedan or SUV. It’s also important to consider the climate where you live — how summer and winter friendly does your vehicle need to be?
The last piece of the puzzle is the cost of vehicle which you can afford. Choosing a vehicle with a high residual value can help you reduce the amount it depreciates, which in turn can lower your monthly payments.
Say you’ve narrowed down your search to a fitting model in terms of lifestyle and price — in this case, the Jeep Grand Cherokee. The next step would be to keep an eye on Jeep Grand Cherokee lease deals so you can snag the best promotional price available to you at any given time.
Learn the Car Lease Lingo
Especially if it’s your first time leasing a car, it’s important to know the lingo that will be thrown around at the dealership. We’ve already covered residual cost, which is the predicted value of the vehicle remaining at the end of the lease.
According to Magnify Money, here are some top terms worth knowing:
- Money factor: This is a fancy term for the interest rate of the car. You can turn money factor into annual percentage rate (APR) by multiplying it by 2,400.
- Gross capitalized cost: The complete cost of the vehicle, including fees and taxes.
- Capitalized cost reduction: Anything that brings down the amount of the lease, like trade-in value on another vehicle or manufacturer rebates.
- Adjusted capitalized cost: Gross capitalized cost minus reductions and residual value.
- And remember: Don’t be afraid to ask for clarification if there’s a term or a number you don’t fully understand.
Get Ready to Negotiate
There are opportunities to negotiate on a car lease, while trying to get a break on other costs — like residual values — is akin to barking up the wrong tree. It may be possible to get a lower money factor, the length of the lease, the price of the vehicle and the annual mileage limit. By knowing what you may be able to alter before signing the lease, you can ensure you’re getting the strongest deal.
Half the battle in signing a lease effectively is simply preparing ahead of time. Choose the right vehicle for your needs and wants, know what is negotiable and know lease-specific terminology for best results.