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Are you looking for answers about what is car leasing? or how does leasing a vehicle work, then you’re in good company. Some of us may not be familiar with all the pros and cons of leasing a car. In fact, there are many auto leasing options available.
In general, vehicle leasing is the rental of a car, truck, SUV, minivan, sports car, or electric car for a fixed time period. Many car and truck dealers offer vehicle leasing as an alternative to traditional auto purchase or financing. It is widely used by companies when acquiring business vehicles. Generally speaking, leasing a car costs less than buying, although there are several restrictions, such as vehicle mileage limits and customization agreements, that can determine whether it is better to lease or buy a vehicle.
Let’s examine our ten most frequently asked questions regarding vehicle leasing.
The benefits of leasing a car are unique. You cannot get them with other auto financing offers. These benefits include maintenance provisions, not needing to trade-in or sell an old vehicle, and lower payments. For more details on the benefits of auto leasing, our vehicle finance department is standing by to answer all of your questions.
Deciding whether to lease or buy depends on many factors. Do you drive a lot of miles annually? Do you like to keep your vehicle for a long time? If so, then car leasing might not be your best option. However, if you look forward to getting a new car every two to three years and have no interest in the trade-in/selling process of your current vehicle, you could be a prime candidate for an automotive lease. Basically, the difference between auto leasing or buying really comes down to your personal, automotive and financial priorities.
Also, it is worth mentioning that some owners find high mileage leasing to be more beneficial in terms of financial safety and security than vehicle ownership. Statistically speaking, despite the overage fees you may pay when returning a high mileage leased vehicle, it is likely that you will come out ahead, compared to buying a car. High mileage causes a significant reduction at resale, but with leasing, it’s already taken in to consideration. Additionally, the more time you spend on the roads, the more susceptible to accidents you will be. Therefore, if or when that accident occurs on your own vehicle, you would receive wreck history on CarFax, as well as a resale/trade-in deduction for vehicle damage. With leasing, you are not responsible for the deduction in value from that accident.
Many manufacturers and dealerships offer zero-down lease deals. Of course, there are varying factors that qualify or disqualify customers from these kinds of leases. Factors like credit scores, credit payment history, etc. Just don’t forget that paying nothing down typically means bigger monthly payments. Vehicle leasing, like traditional auto financing, works like this: the bigger the down payment, the lower the monthly payment.
Yes, you actually can lease a used car. This type of ‘used car leasing’ is a little known ‘secret’ among auto dealership but most do offer Certified Pre-Owned leasing specials on CPO vehicles less than four (4) years old and with less than 48,000 miles on the odometer.
Most auto leasing contracts have buy-out clauses in them in the event that you fall in love with your vehicle and decide to buy it. Keep in mind the purchase price of the car may vary. This depends on the vehicle’s residual value after the lease agreement has expired. There are also options to purchase your leased vehicle prior to the completion of the contract. For this, however, you will need to speak with a leasing manager. Only they can provide these buy-out details and take care of any early termination fees that may apply.
Usually a lease deposit is only refundable at the termination of the lease. This assumes that all the leasing contract specifications have been met. Keep in mind that a deposit (a.k.a. a security deposit) is not the same thing as a down payment. Down payments are not refundable but security deposits typically are. It is important to note some leases require non-refundable deposits. Be sure to read your lease agreement diligently and ask as many questions as you have before you sign on the dotted line.
While it is not impossible, it is difficult to lease a vehicle if you have a poor credit rating and no money for a down payment. Most zero-down lease offers require a healthy credit rating. But don’t worry, there are plenty of options available for car shoppers with less-than-stellar credit scores. To explore your leasing options, simply contact our financing team.
Generally speaking, credit score of 619 or lower is classified as “subprime”. While a subprime borrower won’t typically be automatically declined, a 619 or lower credit score means you will most likely have to pay a higher interest rate and/or down payment. Luckily, there are a lot of steps you can utilize to improve your credit score such as making on-time payments, consistent employment history, and applying for loans too many times.
One of the more popular benefits of leasing a car is the maintenance provisions available in most lease agreements. Of course, specifics will vary within specific lease contracts, but most leases will cover your leased vehicle’s normal maintenance and service needs. These include fluid and filter changes, normal tune-ups, and regularly scheduled maintenance typically do not cost the lessee anything out of pocket.
Typically speaking, yes, you can trade in your leased vehicle at a different dealership. It must, however, be an authorized dealership for the vehicle manufacturer. It’s probably obvious, but you can’t turn a leased car into any other brand of dealership. You can, however, turn your leased Volkswagen into any authorized Volkswagen dealership across the nation. Again, assuming all your lease contract obligations have been fulfilled.
If you have more questions about vehicle leasing or our current offers, then contact us today. Our team of leasing specialists are on hand to respond to all your questions.
Top Ten Car Leasing Questions to Ask Your Dealer | Volkswagen of Kearn Mesa
