Leasing a car is a sore subject for many people either because of a bad experience or hearing about a bad experience from a friend, relative or coworker. Often times these poor experiences are caused by common car leasing mistakes, but that is not always the case. The leasing of automobiles has been around for many years, but it has changed and transformed over the years to become what it is today. In the past leasing a car and how it was handled at the end of the lease was often controlled or greatly influenced by the car dealership rather than the auto manufacturer. This left many options in the hands of the car dealership personal which often lead to unethical and questionable practices that left a bad taste in the mouths of people that leased cars.
Today’s car leases are for the most part controlled by the financial divisions of the automakers offering lease options and less susceptible to car dealer scams. That’s not to say that people no longer have bad experiences when leasing a car, but in most cases these unfortunate incidents are caused common car leasing mistakes. Leasing a car is a perfect fit for many people, but it’s not the right choice for everyone. In fact only a small percentage of the car-buying consumers today lease cars, but that could change if they better understood car leasing and how to avoid these auto-leasing mistakes.
Car Lease Mistakes and Bad Decisions
Mileage: When you lease a car one of the conditions of the transaction is the miles of usage allowed per year, which is a very common car lease mistake. The most common lease mileage is 12,000 mile per year, but automakers offer anywhere from 10,000 miles per year to over 20,000 miles a year and these will affect your monthly lease payments accordingly.
Of all the car lease mistakes the most collective that I have seen is people choosing a mileage allowance too low. When you use more than the allotted miles of your leased vehicle you will be responsible for paying for the excess miles at the end of the lease. These miles can cost anywhere from $.10 a mile on the low side to $.15, $.25 or even more depending your original lease agreement. You are better off overestimating your mileage needs rather than underestimating them, because it will cost less up front and it won’t be such a surprise. I recall one customer that leased a $21,000 car for 36 months at 12,000 miles a year, but because of a job transfer she racked up so many extra miles that she had to pay $7,000 at the end of the lease. Be careful when it comes to estimating your mileage requirements and avoid any surprise expenses that will sour you on car leasing.
Payment: Too many people end up leasing cars in order to have a lower monthly car payment, but this common car leasing mistake will catch up with you in the long run. I have seen people that came into the dealership to buy a car and end up leaving in a leased car because of the lower payment. The automakers advertise low lease payments to drive potential customers to the car dealers, but they also know that a professional car sales staff will succeed at leasing or selling these potential customers a car one way or another. Sure leasing has a place, but it’s certainly not for everyone. Don’t make the mistake of leasing a vehicle if it will not fit you needs and lifestyle.
Term: The most common car lease term is 36 months or three years. I both seen and talked customers into a longer lease term in order to further lower the monthly payment to make a deal. It depends on the car, the lease conditions, residual value and other factors, but often times a longer lease term will lower the payment. When you lease a car for longer than 3 years or 36 months you will very often go past the manufacturers warranty period which can result in paying for repairs and other unforeseen expenses.
One of the benefits of leasing for 36 months is that the vehicle is covered the manufacturer warranty for the entire lease term. When you go beyond that term you risk the chance of having to put money out to maintain and repair a vehicle that you may be returning in the near future. If you are going to lease a car the ideal term is a period that allows the vehicle to be covered by the automaker’s warranty.
Credit: Many people think that credit is not a major concern when leasing cars because they are thinking about leasing renting a car, but that’s not even close to being true. In fact credit is very important when it comes to leasing because lease promotions are based on a top tier credit score. Your credit is as important and buying a car because you will be signing for the full amount or in others words its like buying and financing a car without a down payment. Your credit will report the full value of the vehicle until you end the lease.
I have talked to many people that thought it would be easier for them to lease a car because of their not-so-good credit, but its not going to happen. You can lease a car with less than great credit if your credit falls within the qualifications, but you will pay a higher rate of interest or money factor. Your payments will be higher and that’s when leasing a car no longer make good economic sense.
Usage/Condition: Leasing a car is like owning a vehicle for a fixed period of time, but that time period will end and then the car needs to be returned or purchased. A very common car leasing mistake involves how a vehicle is used and the condition of the automobile. Leasing requires the lessor to maintain and care for the vehicle in a reasonable manor. In other words you better take good care of the vehicle because if you don’t you will be paying to repair or recondition the vehicle to what someone thinks is reasonable condition. If you are not very good at taking care of your cars you should probably think twice about leasing a vehicle. I am not talking body damage because that should be covered by your insurance, but I am talking about door dings, scratches, cigarette burns or tears in upholstery. Small things like those can be very costly to repair and you will be responsible for coughing up the money to get them repaired.
In my years of selling and leasing cars these are the most common car leasing mistakes that I have seen first hand, but there are more. The most important part of leasing a car is being aware of all the details. Before you put your name on any automobile leasing documents make sure you understand all of the terms, conditions, disclaimers, stipulations and responsibilities.
Popular Car Buying Articles
Fees and Hidden Costs
for Buying Cars