How to Lease a Car

Leasing a car can often feel a bit overwhelming for new or inexperienced buyers. Navigating the dos and don’t can be confusing, but with some guidance, you can breeze through the process smoothly and with a lease that fits your lifestyle and budget. This blog will give you a roadmap to understanding how car leasing works, securing a fair lease deal, and using a calculator to plan your lease terms.

Understanding Car Leasing

Think of leasing a car like renting an apartment; you pay to use it for a set period. This is typically between two and four years, without actually committing to ownership of the vehicle. When your lease term ends, you can choose between either returning the vehicle, buying it for a predetermined price, or starting a new lease. The primary benefit of leasing is it gives you the ability to drive a newer car for less money than buying. You often have lower repair costs because the vehicle is under warranty.

When you lease, you’re responsible for monthly payments that cover the car’s depreciation during the lease term, interest on the leased amount (often referred to as the “money factor”), and various fees. It’s important to understand that you’re paying for the vehicle’s depreciation—the difference between the car’s value when new and its residual value at lease end.

Securing a Fair Lease Deal

Do Your Homework

Before going into a dealership, it’s essential to do your research. Start by determining what kind of car meets your needs. Consider factors like size, fuel efficiency, and other premium features. Determine which cars hold their value best as this affects depreciation, and finally look into promotional lease offers.

Negotiate Like a Pro

The biggest key to getting a fair lease deal is negotiation. Treat the lease terms as you would the price of a car you’re buying. It’s important to negotiate the capital cost of the vehicle down from the MSRP (manufacturer’s suggested retail price), the same as you would normally haggle for a purchase price. The lower you can get your capital cost, the lower your monthly lease payments will be.

Also, remember the lease-end terms, such as mileage limits and wear-and-tear charges. Going over the agreed mileage limit can end up costing you. So be sure to consider your driving habits carefully and negotiate a limit that works specifically for you.

Understand the Fine Print

Before you sign on the dotted line, take note of all the fees involved. These can include acquisition fees, disposition fees, and possibly a purchase option fee if you decide to buy the car at the end of the lease. Ask for a complete breakdown of all the costs before agreeing to the lease.

Planning Your Lease with a Calculator

An auto-lease calculator can be an invaluable tool in your leasing toolkit. It can help you estimate your monthly payments as well as figure out which leasing terms work best for you.

Input the Numbers

You’ll need to know a few numbers to get started. Firstly, the capital cost of the car, the residual value, the lease term, the money factor, and any fees. Input these into the calculator to get an estimate of your monthly payments.

Adjust the Variables

Once you have a good baseline to go off, try to adjust with the numbers. For example, see how different down payments, lease terms, or perhaps even different cars could affect your monthly payment. This can help you decide what you’re comfortable spending and the terms you’d like to negotiate.

Prepare for Negotiations

If you’re armed with the knowledge from your predetermined calculations, you’ll be able to enter lease negotiations with confidence. You’ll know what a fair monthly payment should be and can work with the dealer to reach far more agreeable terms than blindly walking into the showroom.

Leasing a car doesn’t have to be a confusing journey. Finding high-quality and affordable auto insurance shouldn’t be, either. Louisiana Farm Bureau Insurance has you covered. Use our Agent Finder to reach a local agent and get a quote today.