Leasing a car may seem like an attractive option but don’t be caught out by the small print about mileage caps, warranties and more. Here are the 5 important questions you need to ask before leasing a car:
What payments are due at the beginning of the lease?
When you begin a lease, you must make a deposit. Often you can decide how much you would like this to be, although some companies have a minimum deposit. The more that you pay initially, the lower your monthly payments will be, as the total cost of your contract will be the same. It used to be that you would pay 3 monthly instalments at once but more often now a sum such as £1000 or £2000 is agreed upon – the good news is that you can negotiate on your down payment.
What is the duration of warranty and what does it cover?
Car factory warranties cover any repairs needed which are not caused by accident, everyday wear and tear or abuse and generally last 3 years. If you are leasing a new car, it will often still be covered by the factory warranty for the duration. Consider an extended vehicle protection plan if you have a long lease term. If you need to know more on this, Carchex has a useful article here.
What are mileage caps and what should I know about them?
Most car leasing companies will offer a range of mileage options, from low, to medium or unlimited. An unlimited mileage plan is exactly that, you can drive as many miles as you like without having to pay a penalty, but your monthly payments will be much higher. A low mileage plan may appeal if you don’t drive long distances on a regular basis, or if it will be your second vehicle, as the monthly payments are often much lower. Be aware that you will have to pay a penalty at the end of your lease if you go over your mileage allowance or cap, normally calculated as an amount per mile over the mileage cap. IntelligentCarLeasing.com, who provide car leasing services throughout the UK, go into greater detail on mileage caps here in their useful leasing FAQ.
What maintenance expenses are your responsibility?
The exact details relating to your car lease will be detailed in your lease agreement. In general, most of the repairs will fall on you and must be undertaken in an approved repair shop.
What are the terms for premature termination?
You often will have to pay an early termination fee if you want to finish your lease before your term is up. It’s possible to avoid these fees by trading in for another car, buying the vehicle, or transferring the lease to someone else. DMV.org’s guide gives more information on these options.
Leasing a car is one option but if you think it’s not for you here is our guide to buying used cars.