Car Leasing is different from buying as you’re paying for the use of a vehicle and not the full value of it. But while leasing, you have to beware of the dealers’ tricks so that you don’t get ripped off.
Are you planning to lease a car? Many of you are pretty much aware of the car leasing and how it can have lower monthly installments than buying. But still many of you don’t understand what it means to lease. In case you’re curious about how to lease a car, you aren’t alone. Car leasing is another less-headache method of financing that’s quite cheaper than the alternatives. While leasing a car, you aren’t paying its full value, but for its usage like depreciation value, excessive wear & tear, and any excessive mileage put on the car while you’re leasing it.
Just like any other traditional financing, you have to pay interest on the price of that car as the leasing company buys a car from a dealer before turning around & leasing it to the customer. But if you aren’t careful, you may end up paying more to buy & finance a new vehicle than you really need to. Therefore, it’s imperative for you to beware of the dealers’ tricks and dodge accordingly to make the deal turn up favorable for you. So let’s dive;
Preying on your Lack of Information
Keep in mind! A salesperson just loves a clueless car shopper. It’s quite obvious that you won’t be able to negotiate a fair price for a car when you have no clue what that price should be. Before heading for the dealership, check out online platforms to find the average transaction price for that specific car you want to buy. Or you might want to add such apps to your smartphone and punch in the model, equipment packages, trim level, and other options to get a better idea of the price range.
This way, it’ll be easier for you to know what exactly the car buyers are paying for the ride you’re considering, and for sure, it’ll be hundreds & thousands, of dollars less than the suggested retail value by the dealer. Just try to be a smart shopper so that you can pay a little less than the average transaction price.
Making it all about the Monthly Installment
Typically, a salesperson asks about the biggest monthly payment you can afford. Having that in mind, they will calculate the most you are able to spend and come up with the monthly payment to drag out the loan for as long as possible. In the next phase, you’ll be shown cars in that price range – honestly, it’s normally higher than what you planned to spend – while you are reassured that a better ride would work well within your budget.
For instance; you want to buy a compact sedan worth $20K but and you could afford $450 as a monthly payment. The salesperson would play a trick and recognize that a 60- or 72-month loan will enable you to buy a $25K worth midsize sedan while keeping your payment at about $450 a month. And the salesperson will try to sell you that midsize sedan. If you are fascinated by that swanky look, you’ll buy that. In short, this would be a bigger sticker price and longer loan. It clearly means that the dealership will make more money.
To act wisely, just stick to the 20/4/10 rule. So when you plan for the long-term car lease Bahrain, you’re going to put down at least 20% on a car, having payments for no more than 4-years and not even spend more than 10% of your monthly income on your car expenses that also includes a note, maintenance & insurance.