When you`re in the market for a new car, one option you may consider is leasing. Leasing can be an affordable and flexible option for those who want to drive the latest model without committing to purchasing a car outright.
However, before you sign a car lease agreement, it`s important to understand the terms and conditions. Here are some of the most important terms you should know:
1. Capitalized Cost: This is the initial cost of the vehicle you`re leasing. It includes the purchase price, any fees, taxes, and other charges.
2. Residual Value: This is the estimated value of the vehicle at the end of the lease term. It`s used to calculate your monthly payments.
3. Mileage Allowance: This is the number of miles you`re allowed to drive your leased vehicle each year. If you go over this limit, you may have to pay additional fees.
4. Lease Term: This is the length of time you`ll be leasing the vehicle.
5. Monthly Payment: This is the amount you`ll pay each month to lease the vehicle.
6. Early Termination: This is the fee you`ll have to pay if you end the lease early.
7. Wear and Tear: This refers to any damage or excessive wear to the vehicle beyond normal wear and tear. You may have to pay additional fees if the vehicle is not returned in good condition.
8. Gap Insurance: This is insurance that covers the difference between what you owe on the lease and the value of the vehicle if it`s totaled or stolen.
9. Acquisition Fee: This is a fee charged by the leasing company to cover administrative costs.
10. Disposition Fee: This is a fee charged by the leasing company when you return the vehicle at the end of the lease term.
Understanding these terms will help you make an informed decision when leasing a car. Be sure to read the entire lease agreement carefully and ask any questions you may have before signing. Happy car leasing!