How Does Auto Leasing Work?
When it comes to obtaining a new car, you essentially have two options: you can either buy or lease. There are many benefits to doing each, and you will need to carefully assess your own unique situation to determine which option is right for you. Generally, if you drive under 15,000 miles or so per year, enjoy the idea of always driving a newer vehicle, and want a car that is always under warranty, then auto leasing agreements may very well be the best option for you.
All About Car Leasing
Of course, it is important that you understand how car leasing works before you fill out any applications at local dealerships. Essentially, an auto lease can be a term of typically anywhere from one to three years. During this time, you make monthly payments to car financing and are allotted so many miles on the car per year. Any overages in terms of miles can be billed at a pre-determined rate per mile as laid out in the leasing contract.
At the time your lease is up, you return the car to the dealership and you may trade up to another car or even purchase a vehicle at that time. In some cases, you may even be able to purchase the leased car outright if it turns out that you enjoyed driving it enough.
How to Apply for Leasing
The application and approval process for leasing is surprisingly similar to that involved with actually buying a car with an existing loan from a lender. Specifically, you can expect to:
- Put a small down payment on your lease
- Fill out a detailed application with employment and income information
- Possibly be subject to a credit check before approval
Upon being approved for your lease, you can then work out the specific lease terms. You will also be offered an interest rate, as car leasing is still considered to be a form of financing. From there, you can enjoy having your brand new leased car without the inherent responsibility and hassle of owning your car outright.
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