Leasing a car is a great option for many drivers, but it’s important to take all factors into account when deciding if you’re one of them. Here at Mike Reichenbach Ford of Florence, our auto finance specialists recommend considering the lease terms, mileage restrictions, and monthly payments as well as your budget.
Because a vehicle lease provides more flexibility than buying a car, it’s an appealing option for many local drivers. To ensure you have all the facts before signing on the dotted line, we’ve provided some helpful details below. Read on to learn more, and if you have any questions, feel free to get in touch!
What Is a Car Lease?
When you lease a vehicle, you sign a type of long-term rental contract for a fixed period of time. The agreement is between the driver and the dealership or leasing company, and specifies the lease length, monthly payment, and mileage limits. A car lease is an alternative to traditional car loans, allowing drivers to trade up to a different vehicle every few years.
Why Would You Want to Lease a Car?
There are plenty of benefits to leasing a vehicle, making it a better option than buying for many customers. In fact, car leases are perfect for those who want to drive a newer car with the latest technology and driver assistance features – without making a long-term commitment. Lease contracts are for a shorter time period than most loan terms, so you won’t be locked in for as long.
The most significant perk is that you can drive a factory-fresh vehicle without paying the full price upfront. Plus, you won’t have to worry about the car’s value depreciating, since you’ll only drive it during the lease term. That also means you’ll enjoy low maintenance costs! New vehicles need fewer tune-ups to maintain peak performance, so you won’t need to worry about the costly repairs that older vehicles often require.
When your lease term comes to an end, you won’t need to worry about trading it in or selling it. Just bring it back to your local Ford dealership and hand over the keys – quick and convenient!
Payment Factors
Leasing a vehicle is almost always more affordable than buying one, with lower monthly payments throughout the term. Your monthly lease payments are determined by several factors, like the following:
- Vehicle price: The pricier the vehicle, the higher your monthly payments.
- Lease term length: Term lengths range from a year to five years, with longer terms equating to lower monthly payments (but more interest paid over time).
- Your credit score: Customers with higher credit scores will enjoy lower payments.
- Down payment: While a low down payment is permitted, the more you pay upfront, the lower your monthly payments!
- Interest rate: Annual percentage rates also play a role in your monthly payments.
Common Terms on Car Lease Agreements
Lease agreements may be filled with confusing terminology, so our team is here to help you learn the lingo! Here are a few common terms you’ll likely encounter
Mileage Allowance
The number of miles you are permitted to log throughout the lease term. Exceeding the mileage limit will result in an excess mileage charge since the extra miles lower the vehicle’s value.
Residual Value (RV)
Set at the beginning of the lease, this is an estimate of the car’s value at the end of the lease. Due to depreciation, the higher the RV, the lower the monthly payment.
Two Main Types of Car Leases
Closed-end leases are the most common type, offering a set term and mileage limit. Plus, you can walk away with no further payments if lease agreements are satisfied.
Open-end leases typically do not set a specific term length or mileage limit. At the end of the lease term, the driver is on the hook for any difference between the car’s residual value and its market value.
Talk to Our Ford Finance Department in Florence Today!
Interested in leasing a new Ford? Get to Mike Reichenbach Ford of Florence to learn more about available lease offers! While you’re here, browse our new vehicle inventory, including these popular models:
- Ford Bronco lease
- Ford Edge lease
- Ford Explorer lease
- Ford Ranger lease
- Ford Mustang lease
- And more!
Whether you’re interested in leasing an adventure-ready 2023 Ford Bronco Sport or scoring a great deal on a rugged work truck, our team is here to help! We’ve been proudly serving drivers throughout South Carolina for 14 years, offering first-rate customer service each step of the way. From finding the perfect vehicle to financing it, we’ve got you covered. Come see us today!
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