Welcome back to the Hastings & Hastings blog. This month we have been diving deep into the topic of automobiles. We began taking a look at the differences between leasing and buying a car. Each path has its own distinct advantages and disadvantages. When it comes picking on or the other, it often comes down to your specific lifestyle. Are you more concerned with saving money long term, or do you prefer to have a new car every few years? Just as an exercise, today we are going to pretend you are committed to leasing. To help you get the best deal possible, we are going to cover a few common leasing mistakes.
- Underestimating Mileage Limits
Yearly mileage limits are one of the primary difference between buying and leasing a car. If you have not leased before, it is easy to underestimate how restrictive mileage limits can be. The cost for exceeding mileage limits can range anywhere from 10 to 30 cents per mile. While that may not sound like a lot, it can add up VERY quickly. Leasing companies will commonly advertise lease with very low monthly payments as a way to get potential customers in the door. Be cautious about such offers as they may come with stringent mileage limits. Before signing a lease, familiarize yourself with your driving habits. Project how many miles you travel per year. Give yourself some wiggle room when it comes time to sign the lease.
- Pay Too Much Down
It is recommended to making a down payment of more than $2,000. This is a precaution in case something happens to the car. If the car is severely damaged or stolen, the insurance company will reimburse the leasing company, not the leaseholder. Rather, save this money and spread it out over the term of the lease.
- Carry Gap Insurance
Gap insurance will protect a leaseholder in the event that the car is totaled or stolen when the value of the car is less than the leaseholders total financial obligation. If this happens without gap insurance, the leaseholder may have to pay the difference out of pocket. Insurance companies and leasing agencies alike highly recommend carrying gap insurance.