The One Most Popular car leasing mistake to avoid
People who lease a car usually do so simply because they get the opportunity to drive latest, "better" model cars for a lesser amount of money than the price of a purchase.
But drivers who wish to lease a car should really ensure they read the fine print before signing a contract, states Philip Reed, senior consumer advice editor at auto research site Edmunds.com. "People make a too much mistakes when setting up their car leases, and it can cost them lots of money," he says. Here is the one and most common car leasing mistake that consumers must avoid.
Paying too much money in advance
Car dealers publicize low monthly car lease payments on brand new vehicles, but consumers are frequently asked to cough up many thousand dollars at the start of the term to get the rock-bottom payment, says Reed.
That money is typically utilized to pay part of the car lease ahead of time. "But prepaying is an issue if the car is wrecked or lost through theft in the very first couple of months," says Reed.
If that were to occur, the insurance company would compensate the leasing company for the worth of the car, but the money the customer paid in advance would most likely not be paid back, he says. As a result, the consumer wouldn’t have a car, despite the fact that he or she spent lots of money for the period of time
Because of this, Reed suggests that consumers not pay beyond about $2,000 in advance. "In a lot of cases, it is sensible to put absolutely nothing down," he says.
With less money paid in advance, the month to month payments would be higher. But, consumers can take the "prepayment" cash and deposit it in an interest-bearing account preferably.
A lessee could then simply use the money to aid in making the monthly lease payments, says Reed. But in the event that something happens to the car before the end of the term, he wouldn't need to bother about the extra money being in the leasing company's possession.