You’ve got your eye on a new Cadillac, but not the funds to buy it. Leasing could be the answer! But how does an auto lease work? Your questions answered here!
If you think that only the very wealthy can afford a beautiful new Cadillac, you might reconsider after reading this.
Leasing a vehicle is a great alternative to outright buying a new car. However, most buyers are stuck with a simple question: “how does an auto lease work?”
If you’re considering leasing a Cadillac or other car, keep reading to learn all the answers!
How Does An Auto Lease Work?
Before you can consider leasing a vehicle, you must understand how leasing works. And the entire process has both similarities and differences to the normal act of buying a car.
As with buying a car, you will most likely need to make a down payment to the dealer. However, this down payment may be lower than it would be when you buy a car.
Afterward, you must make a monthly payment as part of the lease. However, such payments are also less than you would make as part of an actual car purchase.
There will be a limit on the number of miles you can put on the car. If you go over this amount, you may have to pay the dealer a certain amount of money per excess mile.
At the end of the lease, you have the option of buying the vehicle at a reduced rate. Otherwise, you turn the car in at the end of the lease and then lease a new vehicle.
Now that you know how a car lease works, that leaves an obvious question. What are the benefits of leasing?
The primary benefit of the lease is that you get more car for your money. Simply put, you can lease a new Cadillac for far less money than it takes to outright buy one.
Leasing is also great if you don’t have a ton of spare money for a down payment. This also means you can start driving your dream car almost right away instead of saving for years on end.
Finally, leasing lets you drive a new set of wheels every few years. And you can do so without all of the stress that comes from trying to sell an old car and then buy a new one.
As you know, nothing is absolutely perfect. For as many benefits as leasing has, there are a few drawbacks you should be aware of.
The first drawback is the mileage limits that we mentioned above. If you love to visit faraway family members or take a lot of road trips, you may soon go over your mileage allowance and have to pay a premium.
You also must be very careful about car maintenance (more on this below). If you try to turn in a leased vehicle and it is in poor condition, you will be on the hook to pay for expensive repairs.
Finally, you never build any kind of equity in your vehicle. And if you continue to lease, you never stop making payments like you would if you buy a car.
Car Lease Maintenance
As we said above, you’ll need to regularly maintain your car to ensure it stays in quality condition. And this is where it pays to check the fine print.
For example, some dealers offer free in-house maintenance as part of the cost of your lease. This means you lose nothing but time whenever you take your Cadillac in for service.
If that is not a part of the contract, then you will be responsible for the cost of maintenance. And while this isn’t likely to break the bank, it is yet another cost you should be aware of before taking out a lease.
You know that you need to have automobile insurance with your new lease. But do you know about the importance of gap insurance?
Normally, you get a chance to buy your car at the end of the lease. And what you pay is the “residual value” that represents the used condition of the vehicle.
If you total the car, the insurance company ends up paying the dealer. And you’ll typically have to pay for the “gap” between the residual car value and its actual market value.
With gap insurance, you don’t have to pay for that gap. And trust us: that gap is often several thousand dollars! If the dealer does not offer gap insurance themselves, then look into getting it from a third party for maximum safety.
Get the Timing Right
Many wonder what the average length of a lease contract is. The answer is simple: three years. But it’s possible to get a lease for five years or even longer.
Ultimately, we think you should be wary of longer leases. And it all comes down to the car maintenance that we mentioned above.
It’s easy enough to pay for maintenance in the first few years of a car’s life. But after a while, it will encounter more serious problems that are more expensive to fix.
With a shorter lease, you can avoid being on the hook for more expensive repairs. Alternately, you can just buy the car when the lease is over: the lack of monthly payments will make the occasional repair bill easier to pay.
Saving Money On a Lease
So, you’ve decided to take out a lease? Here are a few ways that you can save money.
First, offer the down payment in cash. As with buying a car, this makes the dealer likelier to offer you better terms.
Second, make sure your credit is in tip-top shape. This gives you ammo to negotiate, especially if you know for a fact that you have good credit.
Finally, don’t bite off more than you can chew. The monthly payments may be lower on a lease, but it’s important to make sure you can afford the payments.
The Bottom Line
Now you have an answer to the question “how does an auto lease work.” But do you know where you can get a great lease on a new Cadillac?
We have all the financing options you need, including leases. To start exploring your options, call us at (402) 238-1729 today to see what’s available!