Although a vehicle lease can offer several advantages, there are some red flags to watch out for on lease buyouts, should you decide you want to purchase the car, truck or SUV you have been leasing for a while. You may have heard of mortgages with balloon payments, requiring a large lump sum payment, but you might not be aware that there are leases with balloon payments, as well. Too many people forget about the large payment looming in the distance until it’s too late and it’s time to make the payment. If you’re not prepared for it, that balloon payment can send your finances into a tailspin.
When it comes to lease terms, 36 months (three years) is the ideal length of time; anything longer than 36 months and you’re usually better off to buy the car outright. One red flag to watch for with lease terms is the 39-month lease. Many manufacturers’ warranties expire at 36 months, and if you read that “39” as a “36” you may be in for some big repair bills for items no longer covered under warranty.
If you have leased a vehicle for a while and it has worked out well for you, it might be worth buying it at the end of your lease term, even though it may be more expensive than if you would have bought it outright, initially. Compare the residual value of the vehicle(the amount you will purchase it for) to the current market value of the vehicle. If the market value is higher, it is a good deal; if not, it is not a good deal.
Another red flag to watch for is a salesperson who says not to worry about any fees at the end of your lease. If you are not told there is a disposition fee of up to $400, that can be a nasty surprise for your wallet! If you decide not to buy your car, be aware of what your lease contract has to say regarding this fee, and don’t allow a salesman to charge you more than your obligation. Disposition fees are now required to be listed on the front page of lease contracts, so the consumer doesn’t miss any fine print buried on subsequent pages.
If your lease stipulates a mileage limit and you believe you will exceed that limit before your lease is up, you have two options; you can either turn the car in early or start saving to cover the mileage penalty. You might want to discuss these options at the time of your lease, to see which one will be more cost efficient for you.
iLendingDIRECT is a national finance and insurance marketing firm that focuses on auto refinancing. Because of our good relationships with several banks, financial institutions, and credit unions, we are able to find the best loan for your situation, making it simple, easy, and affordable to put you in the vehicle that is perfect for you, with the loan that works best for your situation, and perhaps even put money back in your wallet to help manage your bills and help you get out of debt quicker.
We offer our customers smart financial solutions, because we care about you and your financial situation. Give us a call at (866) 683-5505 and ask our loan experts about our auto refinance with cash out, secured auto title loan options, cash loan program, and several other great opportunities to help you save money every month and get your finances on the right track.