A Car on a Budget: 5 Tips for Cheap Car Leasing
Are you looking to lease a car, but don’t want to spend a lot of money?
Seeing as cars depreciate, leasing is often a smarter investment. But, how do you lease a car without spending a lot of money?
Check out this cheap car leasing guide to learn how to lease a car on a budget.
Why Lease a Car?
Before we talk about how to lease a car on a budget, let’s first talk about why you should lease a car. Here are some of the benefits of leasing a car instead of buying one:
Lower Monthly Payments
One of the biggest benefits of leasing a car is that you’ll have lower monthly payments than if you were to buy. While prices vary, typically, you can expect to pay 30 to 60 percent less than if you were to buy.
This means that you may have the opportunity to lease a car that you normally couldn’t afford.
Low Maintenance
If you hate dealing with the maintenance aspect of owning a car, then leasing might be for you. If you lease a vehicle for 36 months or less, you’re typically covered under the manufacturer’s bumper to bumper warranty.
This means that you’ll never have to foot the bill for major repairs. In some cases, the manufacturer even offers 100 percent free maintenance for the first couple of years.
Locked in Residual
The residual refers to what the car is worth at the end of the lease. When you buy a car and resell it, it’s always going to be worth less money in the end. But, when leasing, the residual value is locked in at the beginning of the lease.
Write Off the Lease as a Business Expense
If you’re using the vehicle for business, then leasing is a great idea. This is because you can typically write off the entire lease as a tax deduction.
Even if you don’t own a business, most states only tax you on the usage portion of the lease. This means that you won’t have to pay taxes on the vehicle’s full price. This can save you hundreds of dollars in the long run. You can check out this guide to learn more about business car leasing.
Cheap Car Leasing: How to Get a Cheap Lease
Now that you know some of the benefits of leasing a car, let’s talk about how to get a cheap lease. Here’s what you need to do:
Opt for a Longer Lease Term
Typically, the longer your lease term is, the lower your monthly payments will be. When choosing a lease term, it’s best to look at the manufacturer’s bumper to bumper warranty.
As we mentioned earlier, the bumper to bumper warranty typically covers maintenance costs. But, once this warranty expires, you’ll be footing the bill for these maintenance costs. And, the older the vehicle gets, the higher these maintenance costs will be.
A good rule of thumb is to lease a car for the length of the warranty.
Look at the Mileage
When looking at leasing options, it’s important to pay attention to the vehicle’s mileage.
Most lease deals are based on the assumption that you’ll put 12,000 to 15,000 miles on the car each year. The lower the mileage you choose, the higher your residual value will be at the end of the lease.
The higher the residual value is, the lower your monthly lease payments will be. This means that if you can stay within the 10,000 to 12,000-mile range, you can get a lower lease payment.
Keep Your Eye Out for Interest Rate Markups
When shopping for a leased vehicle, you also want to keep your eye out for interest rate markups.
The interest rate you qualify for is based on your credit history. However, manufacturers sometimes allow dealers to mark up the interest for a little extra money.
If you find that the dealer has marked up the interest rate, don’t be afraid to walk away from the deal.
Look for Leasing Specials
Just as dealerships offer specials when selling cars, so too do they offer specials when leasing cars. Oftentimes, the dealership will offer a special when a car isn’t selling quickly enough.
However, you want to make sure that you’re actually being offered a good deal before you sign. To ensure that you’re getting a good deal, make sure that the dealership doesn’t require a down payment. Also, make sure that you’re not expected to stay under 12,000 miles, unless this is feasible for you.
Gather Several Quotes
A lot of dealerships are willing to price match. This is why you should take the time to gather quotes from several dealerships before signing a lease.
When speaking with dealerships, be sure to ask if they have any special deals. Also, don’t start by saying that you want to lease. Instead, ask for their best sale price. This way, you can calculate on your own what a fair monthly lease should be.
Learn the Art of Negotiation
Negotiation is perhaps the biggest key to scoring a cheap car lease. Here are some negotiation tips to keep in mind:
- Make sure you understand the language of leasing (ie, money factor, residual value, capitalized cost, buyout price, acquisition fee, etc.)
- Understand what you can and can’t negotiate
- Search the internet for lease deals
- Make sure you choose a vehicle that’s in stock
- Avoid costly add-ons
- Double-check the documents before signing
Once you’ve done your research, you’ll be able to negotiate a great deal.
Cheap Car Leasing: Time to Find Your Vehicle!
Now that you’ve read this cheap car leasing guide, you should be able to find a great lease deal. Before you know it, you’ll be driving off the lot in your new car.
Be sure to check back in with our blog for more tips and tricks on finding great deals.