Four Factors to Consider Before Leasing a Car

For people who like to change cars every few years, purchasing can get expensive, as can trade-ins. For these individuals, leasing is often the best option, though it can be pricier than purchasing a car that you will at least eventually own. However, there are a few things to consider before you go out to lease a vehicle.

Substantial Down Payment Risk

When you lease a vehicle, you still have to put down a down payment in most cases, which can range from $1,000 to $3,000, according to Bankrate. If something happens to the vehicle and the insurance company has to pay the leasing company for the car, you don't get the down payment back, which means you are out a few thousand dollars. To avoid this, try to lease the vehicle with little to no money down, if possible.

Determine Leasing Benefits

Leasing is not for everyone, particularly those who want to have something they own outright at some point. The way to determine whether or not you should lease is to decide what your thoughts are about owning -- or not owning -- a vehicle and whether or not you need to have a new car to drive at certain intervals in your life. Figure out if you would drive a vehicle for a longer period if you actually owned it outright or what your thoughts are about regular car payments over an extended period of time.

Leasing Payment Structure

Make sure you understand that the payments for a lease are calculated differently than they are for cars that are financed. Lease payments, according to Bankrate, are actually calculated on the depreciation value of the car. So, if the car costs $10,000 today, it will be worth $8,000 in two years. The lease payment is then calculated on the amount of value lost, which is a benefit to leasing, because payments are generally much lower than they would be on car you are buying outright.

Make Sure You Like The Car You Lease

Car lease contracts are intricate and complicated; moreover, they are so much harder to get out of than a regular financing contract. So make sure the car you decide to lease is one that you like and plan to stay in for the duration of the lease contract. Alternatively, you can ask the leasing company to consider a transfer condition in your lease, which allows you to transfer the terms of your lease to another vehicle before the contract period has expired.