For many drivers, leasing represents an appealing alternative to buying a vehicle outright. With a lease you only keep the vehicle for a set length of time, after which you can choose to buy it outright or turn it in and find a new vehicle to buy or lease. Leases require much of the same information and paperwork as a car sale, as well as some new information about your driving habits.
Income
One of the most important things you need for leasing a car is a stable income. Just as when you finance an auto purchase, you become responsible for monthly payments once you sign your lease agreement. If your income falls or disappears due to job loss or other factors, you must still pay your monthly lease bill or risk losing your car to the lease company. Evaluate your budget to determine how much you can afford each month toward your auto lease.
Credit History
To get a lease you must also have a solid credit history. The interest rate you receive may depend on your credit score, but buyers with poor credit might not qualify for a lease at all. Your credit history tells the lease company, which is often not the same company as the dealership through which you make the deal, that you have a high likelihood of being able to make your lease payments based on your history of handling debt, your outstanding debts and the value of your savings and assets.
Mileage Prediction
Before you sign up for a lease, you'll need to know approximately how many miles you plan to drive annually. Every lease has a mileage allowance, though allowances vary from lease to lease. If you exceed the mileage allowance before your lease is over, the leasing company will charge an additional fee per mile over the limit unless you buy the car outright. A 12,000-mile annual allowance won't be enough if you expect to use the car to drive to and from work every day at a great distance, or if you plan to use it for long driving vacations every summer. In these cases, a 15,000-mile annual allowance will be more appropriate, even if it costs more up front.
Down Payment
You'll also make a down payment when you sign your lease agreement. Even though you may never own the vehicle outright, your down payment will reduce how much you owe over the term of the lease, resulting in lower monthly payments. Your down payment may also include the fees and tax on your lease deal so that you avoid paying interest on them altogether. Finally, some lease companies charge a security deposit to cover the cost of damage to the vehicle, which is also part of your initial down payment.
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