Car Leasing Still a Good Deal?

It is difficult to decide which is best among the various car leasing offers being advertised by manufacturers. Each person has their own particular situation, so leasing a vehicle may or may not be right for them. There are many factors to consider, such as:

How much time is best? Car leases are usually offered for 24, 36, or 48 months. Since new vehicles depreciate the most during the first two years, the 24 month lease will be the most expensive. The lease rate is calculated by the historical depreciation rate of a particular make and model, minus any dealer rebate and manufacturer discount. Thus a low depreciation vehicle will have the lowest lease rates, since the dealer knows it will have a high resale value at the end of the lease. Most manufacturers offer a comprehensive warranty for 36 months, so it is not a good idea to lease a car for longer than that, since major components begin to wear out during the fourth year.

Credit rating. Since a car lease is offered with little or no money up front, the credit history of an applicant becomes more critical. If it raises any red flags, they may have to pay higher rates, or be denied altogether. It will be difficult to get out of the lease if the lessee is unable to continue making payments.

Allowable mileage. Most leases specify twelve thousand miles a year, with extra charges for more than that. The contract specifies that the vehicle will not be driven over rough unpaved roads, will not exceed the mileage limit, and returned in good running condition with only minor wear and tear. If fuel economy is a concern, it may be best to lease an economical car for three years, and then see what is on the market. More hybrid and electric cars will be available.

Insurance. An automobile insurance policy should cover any minor accident, but if the vehicle is totaled, it may not cover what is still owed on the lease, so extra coverage may be needed.

Leasing a vehicle may not be for everyone, but it might be the right step for you.