Majority of people have the rough knowledge of car leasing, but a very few of them know about this in detail. Most consumers believe that car leasing is a kind of care rent service. However, it gives quite similar feeling, but it is not really a car rental. However, you can say it a type of car finance. In this financing service, you pay the dealer monthly for using the car.
There is also a deposit fee, which is given back to you once the vehicle is delivered. You should not forget the charges for extra mileage and damages. So, your monthly payments depend on the depreciation cost and there is some interest rate also to pay every month. So, you should be very careful and read the policy of the dealer and the terms & conditions before signing the agreement.
Whether you choose a new car or select an old car for leasing, you should understand about this car financing method in detail to get the great deal. What is the terminology behind its name and
how does leasing a car work? Let’s understand the terminology and the process of car leasing below:
How to Define Car Leasing in Simple terms?It is basically an agreement between the dealer and lessee for using a new car for a specific time period. A customer is generally allowed to lease a car for between 1 and 5 years. The dealer is offering you the vehicle and for this, he will charge you a deposit fee and monthly payments until the end date of your agreement.
After ending the agreement, you have to return the car to dealer in good condition and then it is his responsibility to sell it back. However, the dealer will check the mileage for extra miles and vehicle’s components for any wear and tear. If any damage or over-mileage is found, then he will charge you against these damages. After returning the old leased car, if you are interested to lease another one, then you will have to sign a new agreement.
How does Car Leasing Work?First off, we would advise you to conduct a thorough research about dealers and their policies. Read the terms & conditions, and then sign the contract after agreed upon. The agreement has the details about deposit amount and monthly payments. It also informs about the time period for which you can drive the car and the mileage allowance.
The contract also describes that what should be the condition of a vehicle while you return. The deposit amount is mandatory to pay initially, which is refundable. You can get your deposit money back when the leased car is delivered to you.
This deposit amount is not fixed and varies dealer to dealer, according to the car’s purchase price, depreciation cost, mileage, and how long you are leasing. Monthly payments are also decided accordingly. So, basically, you are charged for the depreciation, and thus you can save your top dollars on the purchase of a new luxury car by leasing the same for a fixed time period. And, the best part for you as a customer- you have no worry to sell it. Your dealer will handle this hassle.
When the end of the agreement meets, you have to drive the vehicle to the dealer, where it is checked for mileage and condition. How many miles you have covered and what is the condition of the car at the time of return? Everything is checked. If everything is fine, then you are safe from any end-minute surprises in terms of hefty charges.
Once you gather all necessary information about leasing and what is the concept behind it, you can make a better deal for your needs.