subject: What Is Car Leasing All About? [print this page] Car leasing is a method for obtaining a car, which is similar to renting and requires payments to use a car, van, SUV or truck for a fixed period of time. Of course, it is not the same as renting, although the two terms are often being confused. When you rent a car you rent it for several hours or for a day while car leasing periods will usually start from 12 months.
When you are leasing a car, you have to negotiate the purchase price with the dealer the same way you will do when you are buying. This is of great importance but isn't that well known since dealers do not share it. The price of the car is set by the manufacturer not the leasing company. The only time that you won't need to negotiate the price is when a special offer is given to you. And by special, I mean that all the lease factors and price are set in such a way that it attracts your business.
When you agree on a price with your dealer and you sign the contract the car that you choose will be sold to the leasing company. Once that happens, you will lease the car from the leasing company based on this price. That's why the price is a crucial factor when you lease a car - because it determines what your monthly payments are going to be.
The dealer and the car leasing company are different things.
The car dealer is acting as the leasing company's agent and until you start with your monthly payment, you won't deal directly with the company. The dealer will be working out with you the terms of the agreement on behalf of the company. The leasing company will pay him/her a commission for this service and this will add to his/her profit. Once you sign your contract, you get a relationship with the leasing company and not the dealer.
Find the right leasing company for you
As a consumer, you are able to use the option to shop for company, credit union or bank that you are a member of, in order to get lease terms that are better than these that the dealer will offer you.
What does it mean to lease a car?
When you sign a leasing contract, it means that you have agreed to make monthly payments on a regular basis, keep an auto insurance, which is appropriate, take care of the car and pay all the licensing fees and taxes that come with the vehicle. You also agree that you will be keeping the car for a fixed number of months which will usually be 24 or 36 months. Once your contract is signed, you are also expected to stick with the leasing time and not end it prematurely.
When your car lease term is over you are supposed to return the car to the company. If there is damage or broken mileage restrictions you have to pay for them.
