Now that you have seen the benefits that can come from leasing your next vehicle, how do you decide if it's right for you? Consider these four guidelines carefully...
Do you normally keep your cars 6 years or more?
One of the benefits of leasing is that you can drive a new car every two, three, or four years. However, you'll always be making payments. To many people, this is an acceptable tradeoff considering the benefit of always having a new car that is always under warranty. If you prefer to make a significantly higher monthly payment but then have a period in which you are payment-free, then leasing may not be right for you.
Do you have a questionable or lower credit rating?
Because leases typically require a smaller down payment and lower monthly payments, you generally must have a better credit rating than would be required for a loan because of the higher risk to the lease provider.
Do you think you'll want to customize your car, make modifications, or repaint?
A leased car doesn't belong to you, it belongs to the leasing company. Therefore, you cannot make major modifications or install equipment that permanently alters the car. This is particularly applicable to prospective truck buyers. If you are leasing for business use there may be acceptions under fleet leasing agreements.
Are you able to plan how many miles you annually drive?
New-car leases can limit the number of miles you can drive to an average of 10,000-18,000 miles per year. Exceeding the negotiated limit can be expensive. However, all reputable dealerships will offer you the option to "pre-buy" additional miles, if you know you'll be using more, at a much lower cost.
In my next post I will cover the different types of leases available.