What to know when leasing a car

What to know when leasing a car

There are many benefits to leasing a car, as most Americans already know. That's because if you're looking to swap your vehicle every few years, as opposed to once every decade or so, then leasing is probably the way to go.

However, there are also many intricacies involved with the process of leasing a car. Keep these maxims in mind if you're considering doing so – they could have a major effect on your finances.

Some leases come with mileage caps

Some leases come with mileage caps. These caps refer to the amount of miles you're allowed to put on the car between the start and the end of your leasing agreement. If you exceed the mileage cap, you'll be liable for what are likely to be some major charges at the end of your lease. Be sure to keep this in mind whenever you're taking a leased car out for a drive. 

Numerous payments will accompany the beginning of the lease

There's a number of payments due at the beginning of any car lease, so make sure you have your wallet with you when you visit the dealership. At the very least, you'll need to pay your first and likely your last month's payment, license and registration fees, freight charges, taxes, processing fees, and other costs.

There are different kinds of car leases

There are different kinds of car leases. However, the most common – and the type of lease you want – is a "closed-end" lease. Under these agreements, if the car is worth less at the end of your lease than was estimated at the beginning of your lease, you won't personally be liable for the discrepancy in costs. With an open-end lease, you would be responsible for the extent of the difference.

Find out the specifics

In addition to the mileage caps, there will be many other specifics considered and locked-down within your leasing agreement. Among them will be whether or not you have gap insurance – which covers the difference between what you owe on the lease and the car's total cost in case of theft or an accident – and "wear-and-tear" designations, which determine what kind of cosmetic damage you will and won't be liable for at the end of your lease. This is all essential information to keep in mind when taking care of your leased vehicle, so you need to know about it as soon as you sign your lease. 

The vehicle still needs to be insured

Just because a car is leased doesn't mean that you don't have to consider and compare car insurance quotes. Your vehicle will still need to be covered by a thorough policy obtained by you, as if you had purchased the car yourself. So check out these quotes and get your vehicle protected before you take it out on the road. 

Have you leased a car, and if so, do you have any tips to offer other readers?