Are you planning to lease a car? You need to know many things before you go for it.
1. How Should You Think About a Lease?
It is best to think of the lease as pay for use contract. When you go for lease, you are paying for the depreciation at a reasonable interest rate. During the period of the lease you get to drive the vehicle then you return the vehicle at the end of the lease. If you don’t want to own the car, then leasing may be the best option for you. Unlike buying the car and paying a hefty sum for it upfront, you only pay a refundable deposit and monthly lease although leasing may be the best way to drive a new car only if you are ready to pay a monthly lease.
2. Leasing Affects Credit Score
When you lease a car, it affects your credit in the same way taking a car loan affects it. When you apply for a lease, your credit score is looked at. Once you go for lease, it increases the credit utilization which affects the credit score. But with monthly payments of the lease, the credit utilization falls, and your credit score will get normal again.
3. Avoid Making Down Payment
The best advantage of leasing a vehicle is that there is no need for any down payment. While leasing you may have to make a security deposit which is refundable at the end of the lease period. All you have to pay is the monthly lease amount. So, even if you like the vehicle, you should avoid making a large down payment.
4. Leases are Negotiable
If you find that the initial deposit and the lease amount are on the higher side, then you can negotiate them as well. You should try to drive down the costs and even if you have a good credit score you should try to reduce the monthly payments.
5. Exiting a Lease
You should carefully discuss exit options with lessor before the lease starts. A key thing to look is any clause related to penalties that come into play if you exit the lease before the stipulated period.
These are a few things which you need to bear in mind before you lease any vehicle. With these in mind, you will not just reduce the costs of leasing but may avoid any extra fee if you exit the lease early.
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