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Auto Lease Guidelines and Tips

If you are looking to get a car using an auto lease consider some of the following tips and guidelines. You should shop around and compare different leasing terms and read the fine print. There are horror stories about lease agreements that end up costing people a ton of money. Usually it's because they did not carefully read and understand the lease agreement.

Here are some key guidelines to consider when when shopping around for the best auto lease that fits your life:

  • What is the lease term? They usually range anywhere from 24 to 60 months. Remember, that the longer the lease term, the lower your payments, BUT you will end up paying more because of the longer term.
  • Is the lease a "closed end" lease or an "open end" lease? A closed end lease means you can return your car at the end of the term. You will not be purchasing the car. Typically the monthly payments ar higher with this type of an auto lease. An opened ended lease stipulates that you will pay the difference between what is called the residual value and the fair market value. The residual value is a definate amount that is listed in your lease agreement. The fair market value is not known. It may be more or less. If the residual value is greater than the fair market value, you have to pay the difference. You don't know what you may end up having to pay.
  • If you do want buy the car at the end of the lease term...negotiate! If the leasing company has to take the car back from you, they will have to probably auction the car off. They aren't going to get anywhere near the amount you can purchase the car for. Their incentive is for you to buy the car becaue otherwise they will ahve to pay auction fees and get a lower price than what you would pay.
  • If you are turning the car in at the end of your lease, make sure it is in pristine condition. This means you should: Take the car in for regular service, keep your service paperwork, fix any dents or scratches, and before you turn it in, get it washed & detailed. This will hopefully lower your any potential fees the leasing company will try to charge you for.
  • When you are picking out your potential car or truck, try to pick one with a higher residual value. You want a vehicle that keeps its value, or even stays above the expected fair market value at the end of your auto lease term. For example, a Toyata Camry holds it's value better than a Ford Taurus.
  • Find out the mileage allowance for the lease. If its less than the expected mileage that you think you will put on your vehicle, it can get pretty expensive. You don't want to get stuck in a contract that has you paying 10-15 cents a mile after you go over the mileage allowance!
  • Find out the cost of gap insurance. This is insurance that covers the difference between what you owe on your vehicle and what it is worth. If you crash the car or it is stolen, gap insurance will cover you if the amount you owe is greater than the amount the vehicle is worth.
  • Here's the most important tip! Read, read and re-read everything in the lease agreement and make sure you understand everything in it. There are a ton of terms that you might need clarification on that you should research if you don't understand their meanings. Type them into Google so you understand the contract that you are signing!

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