If new car prices are proving to be too high for you in this tough economy, then there is another option you can consider – car lease. Leasing is a convenient way of getting a new truck or car every few years without worrying about selling off the vehicle, something the leasing company will handle for you.
But you have to make an important financial decision at the end of your lease term. You should decide whether you want to lease a new car and return the one you have or buy the car at the pre-determined end-of-lease price. While lease payments may look low in comparison to the loan amount you will have to borrow to purchase your dream car, leasing does not work for everyone.
Consider yourself an ideal lease candidate if
You are not planning on keeping you car for long-term
You are someone who trades in his/her car for a new one every four years (or less)
You are keen to avoid car loan down-payment of up to 20%
You do not drive more than 15,000 miles per year (as is permitted in most car leases)
You are careful enough to maintain your vehicle well (to avoid penalties at the end of the lease period).
A car lease is an attractive option as you pay small lease payments over the lease term as opposed to paying a huge sum upfront when you buy the car. But when you opt for a car lease, negotiate with the dealer and try to get an even more competitive lease deal.
Manufacturer subsidized vehicle lease offers good value for money. Such lease deals are advertised in the auto section of newspapers, so look out for them. The lease rates offered in such lease programs are some of the cheapest you can get. There are many websites that tell you about the best lease programs that are currently being offered in your city. You will also get useful information about residual value and lease terms.
When negotiating a lease deal, you should ideally decide on a target price and bid a few percentage points below this price, with the goal of winding up near your target price. Remember that incentives offered by manufacturers to dealers may decrease dealer costs, which their asking price may not reflect.