Leasing a car can be a great solution for those on a budget looking to get access to the newest cars on the market. And while we’ve previously detailed some of the key mistakes you should avoid while applying for a car loan, when it comes to leasing a car, there’s a different set of things to be wary of. After all, just because you’ve secured the car, that doesn’t mean it is the end of your obligations, nor reason to avoid looking after your best interests. Make sure you don’t commit any of these cardinal sins.
Locking yourself into a long-term lease
Although the merits of a car lease cannot be understated, you don’t want to overcommit and be burdened by ongoing expenses for a car that is continuing to depreciate and likely beyond the scope of its manufacturer’s warranty. Generally speaking, something in the range of 3-5 years is about right. Coincidentally, most auto-maker’s now offer warranty periods of five years, although some luxury producers still offer just the three years’ protection.
Unless you are certain of the idea to convert the lease into a purchase at the end of the contract – which we don’t recommend anyhow – avoid the prospect of any expensive maintenance or repair costs that may arise by ensuring the lease is no more than a short-to-medium term commitment.
Misunderstanding permitted vehicle usage
Many make the mistake of assuming that the terms for a car lease are standardised between lessors. The reality is, each provider stipulates their own contractual conditions, and some of these might not be so practical for certain motorists, particularly those who are required to drive long distances.
Therefore, it is important to browse the contract carefully for any provisions that seem as though they may come back to bite you later on. For example, mileage is one area where providers could set a threshold as to how many kilometres you can rack up before excess charges kick in. While you may be able to negotiate this higher (at an increased cost), falling foul of this term is likely to leave you exposed to significant costs.
Neglecting the condition of the car
On the one hand, if you intend to purchase and keep the car at the end of the lease, it is in your best interests to look after the car and ensure that it is kept in good condition. Eventually, you may as well inherit a car that is as close as possible to being brand new, right?
But there’s also the other side of the coin to consider, being the condition you will need to return the vehicle. The lessor will review the maintenance history of the car under your possession, so don’t think that you can escape this just by avoiding any tell-tale signs of neglect. If however there is any damage beyond the normal scope of wear and tear, you’ll be facing all sorts of other additional expenses.
The Fincar team is here to help you with all your financing needs. Contact us today to help arrange your next car or equipment loan.