How to Lease a Car in Fond du Lac
Before we go into the specifics of how to lease a car, let’s go back to basics and take a moment to explain what leasing a car actually is — and how that differs from financing a car purchase. Also helpful is an understanding of the basing terms used in the language of leasing.
So, what is leasing a car? It’s not the same as renting, and it’s not the same as buying. Here’s what you should know about leasing, renting, and buying a car:
- Car Rental: Renting a car lets you pay to use a car for a short period of time — usually several hours, days, or weeks. People usually rent cars on vacation, when traveling, or on an as-needed basis, such as when their current vehicle is being repaired after a collision.
- Leasing a Vehicle: When you lease a vehicle, you’re paying for the difference between the new car price and what the vehicle is projected to be worth at the end of the lease term (most commonly 36, 39, 42 or 48-months). In the simplest explanation: to arrive at your payment you subtract the projected value at the end of the lease (the residual) from the starting price (capitalized cost) and divide it up over the term, then add interest. There is interest (like with a loan) because you get to drive a vehicle that someone else owns (a bank/leasing company). At the end of the term you get to decide if you’d like to buy it for the residual value that was established when you first leased the vehicle, or simply turn it in.
- Buying a Car: You can buy a car in-full, but most people use “buying a car” as an alternative way of saying “financing a vehicle purchase.” So, what is buying a car? It involves dividing the full price of a new vehicle over a certain period of months (the loan term), adding any additional taxes or fees, as well as interest paid to the lender. A simple-interest vehicle loan can be conveniently arranged with the bank or credit union right through the dealership.
How Does Leasing a Car Work?: 5 Simple Steps to Secure Your Next Vehicle Lease
- Step 1: Find a few SUVs that Meet Your Needs — The variety of styles, capabilities and features in new cars, trucks, and SUVs has never been greater. Does it have enough seats for the kiddos? Does it have Apple Car Play for when you are stuck in rush hour traffic? Pick out your next vehicle just as if you were purchasing it. But, you can sometimes “live without” a feature or package knowing that the lease is a shorter-term commitment.
- Step 2: Estimate Your Expected Annual Mileage Requirements — Common annual mileages are 10,000, 12,000, and 15,000. However, leases can sometimes be as low as 5,000 miles per year on an exotic convertible or as high as 50,000 miles per year for a road-warrior who drives for work. It is best to be as accurate as possible. Our business office can help you to estimate your lease mile needs.*Pro tip: If you err, do so on the high side, but don’t overblow your mileage needs. It’s better to be a little over than way under your miles. Thi is because you pay per mile when you go over, but you don’t explicitly get money back for being under.
- Step 3: Work with our team to determine the best term (length of lease) for your needs. — What’s a good vehicle lease term length for you? The dealership will run the lease at different terms and one will typically result in a lower payment than the others.
*Pro tip: If the payment is close, choose a term that will keep your vehicle under warranty the whole time. If you drive 12,000-miles per year and can arrive at a manageable payment on a 36-month lease, this may be a better plan than a 42 or 48-month lease if the manufacturer warranty expires at 36,000-miles. If this is not possible, an extended service contract may be purchased to cover the exposure.
- STEP 4: Decide on Your Down Payment— If you have a specific monthly payment in mind, you can adjust your monthly lease payment using cash down. Because leasing typically carries a shorter length than a loan, your down payment makes a more significant impact on the monthly payment. EX: Dividing $2,000 by 36 is $55.56, but dividing it by 72 is just $27.78. This is why advertised lease examples are often shown with optional money down.
- STEP 5: Apply for Credit— Just like with a loan, you’re using a vehicle that the lender owns. So, you’ll apply for credit similarly. Often the most attractive leases come from the lending arm of the manufacturer of the vehicle you’re getting. So go ahead use our convenient [email protected] lease calculator on any new vehicle on this site when you’re ready to secure your next lease from Holiday Automotive!
Explore All Our Car Buying Tips & Contact Us
Want to learn more about car financing or leasing? We’ve made it easy to do just that with our convenient car buying tips page. Want to learn more about how you can save more on your next car lease or loan in Sheboygan or West Bend at Holiday Automotive? Our new vehicle specials are designed for just that purpose. Last but not least, whenever you’re ready to secure a great rate on your next lease at Holiday Automotive, apply online using [email protected]!