Certain Terms To Be Considered Before Signing The Car Leasing Contract

Once, you decide about the car, know the opportunities that are available through

car lease such as additional mileage options that the user can enjoy during the lease period. Further at the end of the lease period, make a decision if you want to purchase the vehicle.

Before signing the car leasing agreement, understand the terms and conditions mentioned in the agreement. The terms include the payment terms, lease period, down-payment, and so on. Go through the agreement thoroughly before you sign since this constitutes the vehicle properties such as the ownership of the vehicle, warranties, duration of the lease period, and so on.

Finally, car leasing ends up with four possible options such as return back the car to the dealer, buying the lease car, trading it or transferring the lease to anyone who is willing to undertake. However, there are certain disadvantages in ending up the contact early because it ends up with the payment of termination fee including excess mile usage and any loss due to damage of the car. If you have an opinion of the car for sale, then compare its residual value with that of the price the leasing company offers for you. If the price allotted is reasonable with the compared value, then you can purchase it.

Once, the car is selected to take up for a lease, it is very important to understand the terms and conditions that are associated with the car leasing. These terms may be confusing and uncertain. But, it is necessary to understand especially the terms such as residual value, open and closed lease, lease term length, mileage, payments, and depreciation. The residual value of a car is the price at which the dealer can sell it at the end of the lease. Open lease is the lease in which a lessee pays the price that obtains as the difference between the residual value and the selling value at the end of the lease. Closed lease is the lease in which lessee pays the amount with regard to extra mileage and damages alone. Also, understand the duration terms because the term may be short or long. The monthly payment will be less in short term when compared to the long terms. This is because there is more possibility of damages to the car in long term when compared to the short term car leasing.

Also consider mileage limits before signing the contract. The dealer fixes up a standard mileage that the person can use within the lease period. In general, the standard leases are up to 12,000 miles per year. But, you can extend the mileage limit based on your necessity while signing the agreement itself. There are certain fees added on the car leasing such as acquisition fee. You have a possibility of negotiating the payments and fees with the dealers. You can deduct the value if the car has depreciation value; hence it is necessary to receive advice from tax adviser with respect to depreciation of the car leasing.

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by: Cynthia Lambert

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