Vehicle leasing is a way to get access to a brand-new vehicle without purchasing a brand new vehicle. Vehicle leasing is basically like a long-term rental contract. Before you get into a vehicle lease, it is important to understand how vehicle leasing works and impacts you.
1. Vehicle Leasing Impacts Your Credit Score
The first thing that you need to know is that leasing a vehicle will impact your credit score. When you apply for a vehicle lease, it will create a hit on your credit score. The dealership will look at your credit score just like they would for an auto lease.
When you take on a lease, each of your payments are reported to the credit reporting agents. Vehicle leases are considered an installment loan. Making your monthly leasing payment is like paying off a loan. It is important to pay your vehicle lease on time, as timely and late payments both can impact your credit score.
2. Avoid Putting Money Down
Second, when you take out a vehicle lease, make sure that the lease doesn't require you to put any money down. Not having to put money down, like you do with a car loan, is one of the major advantages of leasing a car. You don't want to lose out on this advantage.
Additionally, when you pay money down or upfront on a car lease, what you are really doing is pre-paying your payments. It should technically reduce all of your monthly payments by a certain degree, but the downside of pre-paying is that if you end the lease early, you don't get back any money from the down payment you made; it is lost forever. So, make sure your leasing terms don't include any down payment terms.
3. Lease Terms Are Negotiable
Finally, it is important to understand that lease terms are not set in stone. You can negotiate lease terms. With lease terms, you are negotiating with the dealership. As stated above, you can start by making sure that you don't have to put any money down on the lease. Down payments are called capital cost reductions and are up for negotiation.
You can also try to negotiate the annual percentage rate that you are charged for the lease. You may be able to get a lower interest rate on the lease if you have a good credit score.
If you are interested in a leasing a vehicle, it is important to understand that a lease is actually considered an installment loan that will impact your credit score. That means that you have the ability to negotiate the lease terms. Try to make sure that you don't have to put a payment on your vehicle lease and work to secure a low-interest rate.
For more information, contact your local car dealership.