Leasing A Car : The Basics Explained

By: Mark Walters

Entering into any financial agreement can be a minefield of terms and stipulations that can, and most likely will, cause you some financial difficulties if you do not research every part of the contract(s) that you sign. If you are looking to lease a vehicle it is vital that you look at all areas of the agreement and only sign when you are happy that you know everything you can concerning the vehicle and the monetary costs that will be required from you.

Before you sign anything, make sure you bear in mind the points below, then, hopefully, you will be happy that you know exactly what is required of you.

Vehicle Value - Before you even consider entering into a lease agreement on a particular vehicle, you must remember that, just like when you buy a car outright, you are able to negotiate the value of the vehicle. Nowadays it is commonplace for vehicle dealerships to offer discounts and promotions to customers due to the decreasing demand in new vehicles. You will need to discuss with the dealership what freebies they can supply with the vehicle and what other optional extras you require.

Costs - Every month you will be required to make payments that are based on the depreciation of the vehicles value over the term of the agreement. This means that if you are looking for a cheap deal then you need to research which vehicle that is suitable to your needs that depreciates the least. On top of the cost of depreciation will come an additional tax that will cover the costs of the lease agreement.

Insurance - Vehicle insurance is a requirement of the law in terms of running a vehicle on public roads. Insurance can be organized by the leasing company, but will probably cost you more per month than if you were to seek your own insurance agreement. After finding out how much insurance will cost through the leasing company, try to get some insurance quotes from other independent insurance companies to lower your premium.

Extraneous Costs - You must also factor into the equation other costs that will be attributed to the leasing agreement. With the first initial payment, you will be expected to pay vehicle registration and licensing fees and a refundable security deposit. Upon completion of the contract, you may have to pay a disposition fee plus any costs attributed to excessive mileage or maintenance. Additionally, there will be a termination fee if you want to end the leasing contract early.

Article Source: http://yourfinance.co.za