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How The Car Leasing Process Works

The concept behind car leasing is that the lessee will pay a monthly fee to the lessor based on the depreciation of a vehicle in order to use that vehicle for a set period of time. Car leasing is becoming increasingly more popular due to the seemingly increasing costs of new vehicles and the decreasing amount of disposable income that people have, which could be indirectly attributed to the global economic downturn of the last few years.

However, the question that is probably on your lips right now is "How exactly does this work"? Well, read on and you will find out.

The first and probably most important detail for some to make a decision on is what brand of car you want. The value of the vehicle is not the only thing that your monthly lease payments will be based on; actually, you will be paying for the depreciation of the vehicle, so that is what you should take notice of when selecting a model. If you want the cheapest option available, generally speaking most Japanese and some European brands enjoy lower depreciation rates than most American brands, and therefore will command lower monthly lease payments.

So, you know what car you want, but what company is going to offer you the best lease deal? Well, it is common to see advertisements for lease specials from car dealerships, so it would be a good idea to have a look through local and national newspapers for offers. Some, particularly inviting offers could be too good to be true; it is imperative that you read all the small print to make sure particular details like hidden costs are not withheld in the offer price.

You must also think about how many years you would like the lease to run for. Whether you want to lease for two, three, four or five years there are advantages and disadvantages to each. The most common duration for lease agreements is three years as most new car warranties are limited to three years, and during that time the lessee will not have to spend much money on vehicle maintenance, which keeps running costs down. If you don't mind a long contract duration and are just looking for the cheapest option, then a five year contract would probably be your best choice, though remember that once the warranty has run its course, you alone will be responsible for the maintenance payments.

The last few things you need to decide on are the model and payment costs. As with purchasing a brand new car, when leasing a vehicle you will be able to select specific trim levels and the optional extras that you require on the vehicle. It will help you to spend some time working out possible lease payment costs at home, before you approach a dealer. There are free, online lease payment calculators that can help you come up with more accurate approximations. Remember to shop around different car dealerships to discover the best achievable deal for that car.

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