Best Deals When Leasing

If you have your eye on a sweet ride that you think is out of your price range, you may want to look into auto leasing as an alternative to a traditional car loan. Leasing instead of buying can get you into the car of your dreams at a much lower monthly payment than you probably thought was possible for the vehicle.

Vehicle leasing seems to be one of those things that lots of people have heard about but do not actually know how it works. Here at PaydayLoansCashAdvance, we want to let you know how leasing your next car can benefit you. We want to show you how leasing works and give you some leasing tips before you head out in search of your new ride.

How it Works

A car lease is remarkably simple in the way that it works. When you want to lease a car, you do not go through a bank to get the money lent to you. Instead, you have to go through a special leasing company that buys the car for you. Then, that company arranges to lease that car to you for a monthly rental fee. Instead of owning the vehicle, you are paying to rent, or lease, the vehicle. Purchase agreements and lease agreements have some minute differences that you can learn more about on the Federal Reserve Board’s leasing guide if you want information on all the defining details.

Duration and Miles

Normally, an auto lease has a period of three to four years in duration. Some can be shorter, and some can be longer. The lease will also have a mileage allowance for the vehicle, which means that there will be a set number of miles that you are allotted for the vehicle each year. Exceeding the allowed number of miles typically results in a per-mile fee for the excess mileage driven. The standard number of miles that come with a lease is 12,000 miles per year, so you should be leery of any auto leasing offers with a lower allowance.

If you expect to drive the car more miles than what is allowed, then you should negotiate a higher mileage limit. Requesting a higher number of allowed miles per year will raise your monthly rate, but the increase will be lower than what you would pay if you exceed the allowed miles.


Auto leasing comes with more flexibility than purchasing a new vehicle. These days, it can be difficult to negotiate when buying a new car as a result of the margin dealers are working with on their vehicles. The same is not true for auto leasing as many different factors can be negotiated. This includes the already mentioned mileage allowance as well as the term period for the lease.

Auto Leasing Goals

Before setting out to lease a new vehicle, it is a good idea to become familiar with the four main goals any new car shopper should have when planning on leasing their next vehicle. Those goals are: saving money to begin with, getting the money factor reduced, avoiding fees and getting the residual value raised.

To start out saving, you need to try to get the capitalized value of that vehicle as low as you possibly can right out of the gate. If you are not familiar with capitalized value, it is the total cost of the vehicle. This is one instance in auto leasing where you need to put on your negotiating hat. You should attempt to haggle with the dealer as if you were purchasing the vehicle and trying to get the price lowered.

While dealers do not want to give shoppers the information, you need to be persistent in requesting the money factor. You need it to be as low as possible. Why? Because the lower the money factor is for the vehicle, the better it is for your wallet. You can get a very close estimate of the interest rate by taking the money factor and multiplying it by 2,400.

No Fee Lease

Since you are not buying a vehicle, there should be no reason for you to pay any fees on an auto lease. Some dealers will try to get you to pay a security deposit, dealer fees and bank fees. Your aim should be getting a ‘zero money’ down auto lease. All of the fees that the dealer wants you to pay should actually be paid by that special leasing company since they are buying the vehicle. What usually happens is that the dealer charges both the leasing company and the customer so that they get paid twice. Shoppers who know better do not end up paying the fees.

End of Lease

If you do not really plan to keep the car at the end of the lease, then it is in your best interest to get the residual value up as high as possible. Once the lease is up, the value that the car will have is the residual value. The higher that you can get that number, the lower your monthly payment will be for the lease. This is an excellent financial tactic to keep monthly auto costs down.

However, if you are planning on keeping the vehicle once the lease is up, a high residual value will mean a high purchasing price at the end of the lease. In such an instance, it may be a better financial choice to trade slightly higher monthly auto leasing payments for a slightly lower purchase price at the end of the leasing period. Of course, if you change your mind about buying the car at the end of the lease, you will have paid more per month for no reason.

Now that you have learned these leasing tips, it is time to go out there and find your dream car. You might just discover that the hot rod sports car you have always dreamed of owning has a comparable monthly lease price to that more economical sedan that you thought you were limited to when new car shopping.

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