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New Car Leasing – what to ask?
The following are frequently asked questions you should know the answers to before signing your new car leasing agreement.
Q. Can I trade my existing car in, what will it be worth and how will it affect the cost of my new lease car?
A. This can help lower the monthly payments on your new lease car. You need to know when the discount is applied and how much this will be as you may have to pay the full amount and claim it back later – find out first! Make sure you know exactly how much trade-in value you are getting.
Q. What do I pay when signing the lease?
A. Find out all the costs and what they are before you sign on the dotted line for your new lease vehicle. There can be several charges that you haven’t thought of and you should know what each one is and when it needs to be paid.
Q. What free miles do I get, what happens if I go over this?
A. A typical lease car agreement will be for annual mileage between 10,000 and 15,000 miles.
After this you will be charged for every mile at a set rate per mile. Sometimes you can agree a lower rate than first offered – this is important if you think you may go over the set mileage as costs can mount up on your lease car!
Q. If I can't make a lease payment on my new car what happens?
A. Although this is unlikely you still need to find out what happens if you find yourself unable to make the payments on your lease car. Even if it is only a temporary change in circumstances involving one late payment make sure you know the consequences. Insurances such as Early Termination Insurance and Redundancy Insurance are available to cover all eventualities, please ask one of our sales team for further information on that.
Q. Can I hand my new lease car back early?
A. Typically if you have to hand the car back before the end of the lease agreement you will have to pay an early termination charge. Make sure you ask how much this could be. Again, insurances such as Early Termination Insurance and Redundancy Insurance are available to cover all eventualities, please ask one of our sales team for further information on that.
Q. How long is the lease?
A. Lease terms can vary anywhere between 1 year (12 months), two years year (24 months), three years (36 months) and even five years year (60 months). When you choose your lease term you should take into consideration the servicing schedules of the car as terms that go slightly over a 12 month period could end up costing you more in servicing charges e.g. a 39 month term instead of a 36 month term. Check the servicing schedule first!
Q. Can the lease be extended?
A. Not usually a problem but it is worth asking first as the monthly costs may go up. You do not want to be paying one fee for two years then when you decide to keep your lease car for another year to find that the monthly payment goes up.
Q. What happens at the end of the lease?
A. If you have ever wondered where all the cars go at the end of the lease the answer is the caution rooms. Main deals and independent car dealers by the ex-lease stock at trade prices and them sell it on to the public with their profit added. So if you are looking for a used car bargain, don’t visit your local dealer, go to the source and get down to your local car auction!
Q. Can I lease a used car and save money?
A. You can lease a used car but there are several points you should be aware of. The car usually has to be less than 24mths old, “VAT Qualifying” and covered less than 20,000 miles.
Your payment may be lower compared to leasing a brand new car because much of the depreciation will have already occurred. British manufactured cars are usually good value as used cars as they suffer heavy depreciation in the first 12mths. A car that is one or two years old is usually a good bet – don’t buy something too old. Also check the residual value at the end of the term to make sure it is not too high.
About the Author: Jon Bardill Director of GMC Leasing Car Leasing- Buy a New Lease Car.