Getting a good car lease deal may be no easy feat, but you can make the process a success if you follow our tips. To succeed in this initiative, you should clean up your credit; understand why you wish to lease, not purchase, a vehicle; and become familiar with essential decision points in signing a lease agreement. You also should understand the key steps in a vehicle lease agreement.
What Should I Do Before Considering an Auto Lease?
Before you lease a vehicle, do some housekeeping in your credit file. The law allows you to receive a free copy of your credit report once a year, so contact each of the top three credit bureaus – Experian, Equifax and TransUnion – as soon as possible. Go through your credit data and make sure everything is correct. If you detect inaccuracies or fraudulent transactions – for example, you live in New York City but noticed that someone opened a credit card under your name in Wichita, KS – you must quickly notify the credit agencies as well as the credit card company. The goal here is to rid your credit off all types of blemishes – be they fraudulent, error-based or related to inadequate spending patterns. This is important because an accurate credit file – and, hopefully, a higher FICO score – ultimately can help you land a good car lease agreement because the service provider would be comfortable with your risk profile and might offer low lease rates.
Can I Get Good Auto Lease Deals With Bad Credit?
The answer depends on how bad your credit is, as well as what prompted the poor creditworthiness in the first place. Talk to your leasing agent and explain your situation, being as transparent as possible. The agent would review your file, assess your overall financial condition, take into account things like income and employment history, and would make a decision based on a jumble of parameters ranging from credit score and income-to-debt ratio to driving history and insurability. What I am saying here is that bad credit, in the context of a car lease, can relate to your economic situation but also to the way an insurance company would evaluate your driving history and determine whether you are a risk worth taking. With poor credit, you may not get the best auto loan deal around, but suffice it to say that you still can sign a reasonably priced lease agreement even if your credit score pales in comparison with the top percentile of FICO scores of the most creditworthy American consumers.
When Should I Lease a Car – Not Buy It?
Let me ask this question differently: Does a lease agreement make sense to you? To determine whether you really need to lease a vehicle, you should ponder a few things:
- Buying a new car – Maybe you don't have money to purchase a new vehicle or will live in area for a short period.
- Switching vehicles every now and then – You would want to lease if you like to change autos periodically to maintain that nebulous sense of "newness."
- Automotive hygiene is your forte – If you can take good care of the leased automobile, and keep an eye on its interior and exterior, then a lease may be the perfect option for you.
- You respect mileage restrictions religiously – If you know you will not exceed the typical 15,000-mile limit that leasing companies indicate in the lease contract, then leasing may suit you.
What Are Key Steps in Leasing a Vehicle?
Leasing should not be a convoluted process if you apply specific steps, do your research beforehand, and talk to the right people. A friend of mine, who happens to be a successful car dealership owner, says that an effective leasing strategy should revolve around these steps:
- Select the car type – Here you pick the vehicle you want in the dealership portfolio, ranging from sedan to convertible and SUV.
- Choose the model – Keep an eye on things like gas mileage, safety options and dependability when picking a model. Ask your insurance agent the type of car you would need to receive a low premium.
- Test-Drive the vehicle – Take the few models you have selected to test drives. That way, you know how each vehicle feels, and you can evaluate things like shock absorption, comfort and braking. Other criteria you also can gauge during a test ride range from visibility and internal noise to steering.
- Enquire about safety – The last thing you want while driving a leased car is to mechanically damage the vehicle, be it through a traffic accident or because of personal misfortune. So ask the salesperson specific questions on things like electronic stability control (ESC), anti-lock brake systems (ABS) and side air bags that protect the head.
- Compare auto leases – Things to take into account when calculating lease payments range from interest rate and ZIP code to down payment, rebate, trade-in value, residual value, vehicle sales price and lease term.
- Discuss pricing – This phase is very important because it covers the final price you and the dealer agree on. So try to negotiate a better purchase price, and don't worry about "closing fast," especially if the dealer shows impatience in signing the lease agreement.
- Make a down payment – If possible, make a down payment that is as high as possible. This is because your monthly lease remittances will be based on the outstanding principal amount on the agreement date – amount that equals the present value of future payments minus the down payment.
To get the best deal on a car lease, you should shift your attention greatly toward your financial situation, the best lease agreements that may be available to someone with your risk profile, and the reason why you are leasing and not buying. You also should understand key steps in an auto lease arrangement, especially when it comes to price negotiation, down payment estimation and lease comparison.