Leasing a car is a great option but it may not be the best option for everyone. In this article, I will talk about who should lease a car and who it may be most suitable for.
1. Do you have a HIGH credit rating?
It’s very important that you have a pretty damn good credit score or else you’ll get a much higher monthly payment. Generally, any credit score above a 720 should get you the best deal available and put you in what dealerships like to call having “tier 1 credit”. However, it may also be important to have some sort of auto loan/lease history in order to qualify for leasing your next car. If your credit score is below a 720 and/or you do not have any history of obtaining an auto loan, I would recommend finding a blood relative to act as a cosigner for your next lease.
2. Do you drive A LOT?
If you’re planning on going on half a dozen road trips a year along with driving 20 miles to get to work/school every day, you may not want to lease your next car. Most leased cars come with an annual mileage allowance of 12,000 miles. The range is usually between 10,000-15,000 and your monthly payment goes up a little bit if you decide you need 15,000 miles/year instead of the typical 12,000 miles/year base. Your lease contract should say how much you’ll have to pay for EVERY mile over the allowance at the end of your lease. In my case, I would have to pay 15 cents for every excess mile.
3. Are you going to MODIFY your car?
Are you like those 17 year old kids who spend thousands of dollars on new rims or get pitch black tints on all their windows? If you lease a vehicle, you are not the owner of the car and any modifications that you make to the car will have to be removed before you return the car to the dealer. The car must be in its original form before the it is returned to the dealer. If you are going to lease a vehicle, you should be satisfied with the way the car looks exactly the way it is.
4. Can you MAINTAIN the overall condition of a new car?
A leased car is obviously not yours. You will be charged for any excessive wear and tear or damage to the vehicle. Usually this is not a big issue. Most car companies offer a very generous wear and tear allowance, which means that up to a certain dollar amount, you will not be responsible for any wear and tear charges. For my Honda Accord, there is a coverage of $1,500 for any wear and tear upon returning the vehicle at the end of the lease.
5. Do you have a STABLE INCOME and will you have a stable income several years from now?
When you sign a lease contract, you are obligated to pay every single month until the end of your lease. You cannot decide to return the car a week later if you realize that you cannot afford the monthly lease payment. You cannot return the car if you feel like you got a horrible deal. Make sure your income source is sustainable now and for the next few years.
6. Will you stay put in one location and be around to drive the car?
Leasing a car is great for people who use the car daily for commuting to school or work. You should generally plan on using the car most if not all the time for driving. If you’re the type of person that goes on business trips or vacations for a huge chunk of the year, leasing may not be the best option for you. You should drive as much as possible without exceeding your yearly mileage limit.