Clearly Understand Lease a Car Transactions Before Signing

Happy senior couple buying a car.

Leasing a car is the hot trend and whether it is the right option for you needs a little consideration. Buyers passionate about driving new models are enticed with no concerns about the huge cash outlay and low monthly payments. Remember, cost can catch up if the mileage limitation cap gets crossed over if you drive more. Leasing a car is an appropriate alternative whose mileage needs are low. 

There are several such things that you need to get familiar with before signing the lease a car contract.

  • Consider leasing if you need the car for a couple of years or you are passionate about driving fancy new vehicles. 
  • Avoid leasing if you desire to keep the long-term expenses low or you drive a lot in poor conditions. 

If you are interested then you can check out the best car lease specials at Lease A Car Direct Services. Call the professionals and gain information about how lease a car works. You will need to understand how depreciation works and other jargon.


Depreciation means loss of car value over time. The steepest decline a car experience is in its early years. A new car lessee will drive in its steepest depreciation phase. Therefore, constantly leasing new cars can turn out to be a costly way to enjoy a drive. However, if you desire to drive a new car always then it is a great way to go.

Gross capitalized cost

It is the car’s overall price including fees, taxes, add-on, or damaging equity from the trade-in car. 

Capitalized cost reduction

It facilitates to lessen the amount of lease loan. It can include a down payment, rebates, or trade-in allowance. 

Residue value

It is an estimated value of the vehicle during lease agreement expiry. The value is determined by the manufacturer and is non-negotiable. High residual value means the car is worth more at lease expiry and your monthly lease payment will be on the lower side.

Net capitalized cost

It is the amount that you borrow for the lease. Capital cost reduction and residual car value are subtracted from gross capitalized cost. 

The interest rate or money factor

It is not defined as an Annual Percentage Rate or APR. APR gives you a better understanding so to convert you will need to multiply the given money factor by 2,400. Remember, you can negotiate the money factor variable. 

Keep an eye open on some charges you can avoid

  • Acquisition fees or the financing fee [never confuse it with down payment] needed to begin the lease process.
  • Delivery charge or destination fee that covers car delivery cost.
  • Disposition fee or purchase option fee or turn-in fee paid at lease expiry.
  • Mileage overage charges can be overcome if you choose high mileage right from the start. 
  • Excessive wear & tear gets charged if the depreciation of the car gets increased due to damages and non-repairs at lease expiry.

Down payment in the lease of a car is a kind of prepayment against a car getting totaled or stolen or you terminate the contract before the term expires. The down payment is hardly necessary for people with a good credit score. You will also need to research car insurance cost associated with lease a car alternative.