Leasing is a great way to save money on a car payment, and because leasing a car is less expensive than buying one, most people can afford a nicer vehicle. However, getting the best deal on a leased car generally involves getting the best interest rate. Before walking into an auto dealership and signing a lease agreement, it's best to familiarize yourself with leases. Some people sign a bad lease agreement, in which they end up owing thousands of dollars at the end of the term. However, there are ways to lease a car and keep the costs down.
Increase your FICO score. To get the lowest interest rate on a leased car, you've got to have a good credit score. Auto lenders will review your credit report; and determine a rate based on your history. Reducing your credit card balances and paying your creditors on time can improve your score within a short time. In turn, you'll qualify for better rates on a leased car.
Inquire about down payments. You can lease a car without a down payment. However, saving money for a down payment lowers the lease price and the monthly payments. Thus, you're able to keep your monthly expenses low, or drive away in a more expensive automobile.
Shop around for the best rate on a lease. You don't have to accept dealership financing. Once you find a vehicle, look for an auto broker and ask for a rate quote. The broker pulls your credit report, reviews your application and connects you with suitable lenders. In turn, these lenders provide a free loan quote, which includes an interest rate, term and monthly payment. Questions to ask a broker include: What is your broker fee? Are you licensed? How long have you been in business?
Use a co-signer. Getting the best deal on an auto lease is challenging with poor credit. However, using a co-signer or co-debtor may persuade a lender to reduce your interest rate. Hence, you enjoy lower monthly payments. Ask a spouse, parent or sibling to co-sign your lease agreement. The lender takes their income and credit history into account, and they become responsible for the debt---if you default.
Choose the right lease term. Getting the best deal on a lease often involves getting the lowest payment. To reduce your monthly lease payments, select a longer lease term (between four and five years). Shorter terms are convenient, but they involve higher payments.
The average annual mileage allowance on a leased vehicle is 12,000 miles. Exceeding your annual miles can result in a balloon payment at the end of the lease term. To avoid this, negotiate a higher mileage allowance. The penalty for exceeding your mileage is $0.20 per mile. Sometimes, salespeople will talk you into leasing a more expensive automobile or purchasing additional miles. Seriously consider whether you can afford a more expensive vehicle, which equals a higher payment. Furthermore, evaluate your driving needs and determine whether you need to purchase additional miles. You can negotiate a lease price. If you can't get the best price or interest rate on a lease, don't be afraid to walk away. Say "no" to bonus features such as a sunroof, CD changer, leather seats, rims and other upgrades. Going without such features reduces the lease price.
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