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Leasing is just another financing option that allows you to obtain the vehicle you need or want. Instead of payments to own the vehicle, your payments are for the use of the vehicle, estimated depreciation, and the interest. The key to a lease being flexible and economical is for you to know what options and strategies are available to customize the lease contract to your personal needs and finances. Here are five popular strategies.
1. Look for Customizable Mileage Options
One of the most common reasons consumers shy away from leasing a car onlineor in person is because they assume they drive too many miles and don’t want to pay the penalties on the back-end of the contract. Whether you buy or lease a vehicle, you’re going to pay for the number of miles you drive.
When buying a car, you depreciate the vehicle’s resale value, meaning you get less back when you’re done with the vehicle. Depending on the buyer’s market, you may also have a difficult time selling high-mileage vehicles at book value.
With leasing, you have an option on how you want to take the loss. You can customize your lease by buying additional miles up front, or you can pay incurred mileage penalties at the end. Both options end up costing about the same. The difference is that you can better budget the expense by buying up front, but it also means you lose the cost of any miles you don’t happen to use because they aren’t reimbursable.
2. Reduce Your Interest Rate Through Multiple Security Deposits
The security deposit is fully refundable at the end of the lease. For most leases, the deposit rounded up by $50 from the equivalent of whatever the monthly payment ends up being. Some leasing programs and lenders only allow one security deposit, while others offer the opportunity to pay two or more of these security deposits in return for a lower money factor. The money factor is a leasing term used in place of interest rate. The result is a slightly lower monthly payment that ends up saving you around $1000 over the term of a three-year lease.
3. Consider a One-Pay Lease
If your monthly lease payment will be $340 a month for three years, you’ll end up paying $12,240 total with interest. By agreeing to a single lump sum payment for the lease, the lender will often slash the interest rate to some degree. Instead of paying $12,240, you might only pay $11,000, for instance.
This is a valuable strategy for those who have liquid cash but don’t have a lot of credit. Foreign guests who know they’ll only be here a few years may also find this strategy advantageous. Those considering paying cash for a luxury vehicle may want to try out a one-pay lease before making such a large financial investment.
4. Take a Higher Interest Rate If You Plan to Purchase Before the Lease Expires
Not all leasing programs will allow you to request a higher interest rate, but if you’re confident you’ll be able to purchase the vehicle before the halfway point of the lease, then it’s a good idea to negotiate the best price possible. One such way is to get the acquisition fee waived, and some leasing programs will do this in exchange for you taking a higher interest rate. You’ll pay less than $10 extra per month in interest, but you’ll avoid upfront acquisition fees that range from $500 to $1000.
5. Extend Your Lease Until You’ve Found the Right Replacement
Many people panic near the end of their lease if they haven’t determined whether they should buy their vehicle, lease another vehicle, or buy a different vehicle, which often leads to rash, regrettable decisions they blame on the lease process. Most lease programs can extend their leases on a month-to-month basis, allowing you sufficient time to make a calm decision. All you need to do is contact your Orange County auto brokerto make arrangements.
If you need a reliable auto broker in Orange County, get in touch with Below Invoice today. We can help you find and lease the luxury vehicle you’re looking for. Give us a call today at 949-630-0303 to schedule an appointment.