Tips on Maximizing Your Car Lease Term

A car lease term is the length of a car lease, usually expressed in months. In order to maximize your lease term, make sure you negotiate clearly and carefully with your car dealership.

Tip #1 – Warranty

One of the ways to take advantage of a car lease is to choose a lease term that is no longer than the length of the car warranty. Usually car leases are 2 to 4 years, maximum. On very rare occasions a car lease might go to as long as 6 years. It is during this period that car manufacturers offer a car warranty that will fix or replace anything that goes wrong with the car during normal wear and tear. By choosing a lease term that goes no longer than the warranty period, you can guarantee that you will not be unnecessarily out of pocket for major repairs that might occur to the car while it is in your possession.

Tip #2 – Residual Value

Car leases work by putting the first few years of a car’s life expectancy to work for the dealership and car manufacturer. It is during this time that a car depreciates the most and loses value. When you purchase a car, it loses value the moment you drive it off the lot. When you lease a car, the depreciation value is reflected in the residual value when the lease ends. The residual value is the amount you would have the pay the dealer at the end of the lease if you were to choose to go ahead and purchase the car.

In order to maximize your lease, choose a car with a low depreciation rate. A low depreciation rate translates into lower monthly payments because the car dealership is actually losing less money on the vehicle through depreciation.

Tip #3 – Negotiate the Price

The MSRP (Manufacturer Suggested Retail Price) does not have to be the price that a car lease is based upon. Instead, it is a suggestion given to car dealerships on which to base their sale prices. The total price of the car is important because this number has an impact on your monthly lease rate. If you are able and willing to negotiate with the dealership for a better price, then go ahead and ask.  Agreeing to a lower overall price will reduce the final residual at the end of the lease.

Tip #4 – Read the Fine Print

One of the large problems with leasing cars through dealerships is that leases are usually run through their own finance departments. In many instances, finance representatives work off of commission and so they have a vested interest in up-selling customers for added items that may not necessarily be needed or wanted by that customer. As you work with the finance agent, be careful of what you agree to and make sure that you carefully read every document before signing it. You do not want to find yourself agreeing to additional fees or services that you did not intend to agree to.