When you need a new car, but can’t really afford or don’t want to pay the huge amount of money necessary to buy a brand new one, leasing is the best option. However, in the excitement of driving around in a brand new car of your choice at a much lesser price than it would take to actually buy it, people often make mistakes. In order to avoid making those rookie mistakes, go through the following blunders which you should try to avoid at all costs while leasing a car.
Paying Too Much in Advance
On seeing a particularly low monthly payment scheme, it is natural to become interested in what the leasing company is offering. However, the low EMI payments are, almost invariably, only applicable if the customer chooses to pay off a good portion of the lease money in advance. It is suggested that you do not pay a hefty down payment while leasing a car for the following reasons.
In case the car is stolen or wrecked in an accident, you will most likely not get the advance payment back even after car insurance compensates the leasing company for the damaged or stolen vehicle.
In addition to losing the heavy down payment which you shouldn’t have made in the first place, you won’t have a car either.
Leasing a Car without Checking for Gap Insurance
Before signing the contract with a leasing company, make sure that the car has gap insurance and not regular insurance. Consider a situation where your car has been stolen, you have lost your hefty down payment for the lease and you are still paying for that car. This is a very real scenario as regular car insurance policies do not cover the full cost of the lease money, which a customer is obligated to pay under a leasing contract. The reason for this is the depreciation of the vehicle’s value, which begins the moment you take the car out of the showroom. Insurance will only pay for the second-hand assessment of the car before it was stolen or totalled, while you will be paying out the remaining amount with your own money. Fortunately, as long as the vehicle has gap insurance, the policy will be paying the whole amount, ignoring the depreciated value of the car.
Leasing a Car without Checking the Annual Mileage Limit
All leasing companies have an annual mileage limit on the cars that they lease out. The limit usually starts at 10,000 miles/year, but it can be much higher, depending on the monthly payments. Before you settle for a very low monthly pay out scheme, check the annual mileage limit and take a moment or two to consider if that would be enough for the amount of driving that you usually do. Once you exceed the mileage limit, you will be charged for every extra mile that you drive with the car and that’s not desirable.
When comparing prices on websites like Intelligent Car Leasing, it is better to search for a slightly higher EMI scheme to get some extra miles into the lease. This would likely be cheaper than paying extra money for every mile on a car that you are already paying for every month.
Make an estimate of your budget, needs and expectations before progressing with the deal. The most important aspect of car leasing is being thorough in reading and understanding the contract before you sign it. Take the time you need to figure things out or even ask for help from someone experienced to understand all clauses of the legal document. If an offer seems too good to be true, there’s almost certainly a catch to it.