There are a lot of reasons people lease cars, but at the top of the list: you can drive a newer car for less money with a car lease. When you lease, you are paying for the depreciation on the vehicle you are driving. At the end of the lease you can trade in for a newer model. It’s a win-win, right? If you have been leasing a car for a while, you may be able to renegotiate and take advantage of better interest rates.
What is a Car Lease?
When you lease a car, you are paying for the portion of the car that you will be using over the next few years. Car leases generally span 2-4 years. When you lease, you will generally pay less every month than you would if you purchased the vehicle outright, making it a more affordable option than purchasing. However, many times the terms will require an up-front down payment.
Unlike owning your vehicle, when you lease you may have terms and conditions to live with. Often the terms of the lease limit the amount of miles you can drive, and how often you need to service the vehicle. Understand the mileage you will put on the car every month before agreeing to the terms.
How Can You Renegotiate Your Lease?
Generally speaking, you don’t refinance a lease -- you replace your current lease with a new one (with more attractive rates). Before you talk to your leasing company, read the fine print. If your existing lease has an early termination fee, your projected monthly savings might be off-set by terminating early.
Consider Buying the Car
If you like the car you are driving, consider buying out your lease. Why? You can renegotiate your lease, and (often) use the money you have spent on your lease as a down payment for your purchase. A few months before your lease period is up, contact your leasing agent for a payoff amount. You can use this amount to shop around with auto lenders to get a favorable rate.
There are advantages to buying the car you are already driving. If you decide to purchase the car, you won’t have mileage restrictions to worry about. You also won’t need to maintain the condition of the car based on what the leasing company tells you (so you won’t need to worry as much about the occasional door ding or scratch on the bumper.) Often, you can buy the car you have been driving at less than market value. Your payments could be low, and you could avoid the hassle of car shopping at the end of your lease term.
Protection for the Long Haul
No matter if you decide to purchase your leased vehicle or trade it in for something newer, your Farm Bureau agent can help make sure you are driving protected. Your agent can discuss coverage options for your ride, and help ensure your coverage is up-to-date.