Understanding the Car Leasing Agreement
Are you thinking about leasing a Toyota for the first time? It certainly has many benefits such as having the opportunity to drive a new vehicle every couple of years. However, you should always get the facts before you lease. This way, you’ll completely understand what you’re agreeing to, which is why you need to read the leasing agreement before you finalize the deal.
Everyone understands that when you lease a vehicle, it still belongs to the dealership and you’re simply using it throughout the leasing term. The problem is that other parts of car-leasing agreements can be difficult to understand due to the terminology used. For this reason, it’s recommended that you understand the terms used in leasing before you head to a Toyota dealership in Miami Fl.
Common Terms Used In Car Leasing
The lease agreement is filled with a lot of terms that you need to understand in order to know what the contract means. The most common terms used are explained below:
- Cap Cost- total cost of vehicle
- Cap Cost Reduction- the same as a down payment
- Acquisition Fee- the fee charged for processing the lease
- Residual Value- the estimated value of the vehicle as it ages
- Depreciation- the amount of value the vehicle is expected to lose by the end of the lease
- Closed-End Lease- a lease agreement that states you won’t owe additional fees if the dealer underestimated the worth of the vehicle at end of contract
- Early Termination Fee- what you will pay if you end the agreement early
- Gap Insurance- extra insurance that’ll cover the difference between the cost of the vehicle and the amount you owe in the event it’s totaled in an accident
- Excess Mileage Charge- the amount you’ll pay for each mile you drive over the agreed number of miles
- Excess Wear-and-Tear- the amount you’ll pay for any damage acquired from neglect or excessive use
- Disposition Fee-the amount you pay at the end of the lease used to get the vehicle ready for resale
- End-of-Lease Purchase Price- the amount you pay if you decide to buy the vehicle at the end of the lease
Once you understand what the terms mean, it will help you to understand the contract better so you’ll know what you’re agreeing to. This way, there won’t be any misunderstandings later that could affect your finances negatively.
Be Honest With the Dealer and Yourself
Leasing a vehicle has many benefits and it can be very alluring but it’s not right for everyone. For example, if you’re an occasional driver who goes to and from work and who just drives around town, then leasing a vehicle can be an excellent option for you. However, if you do a lot of driving and take long trips regularly, buying would be a better option due to mileage limit and excessive wear and tear fees associated with leasing a vehicle.
For this reason, it’s vital that you be completely honest with yourself and the dealer so you can work together to find the best option for you. If leasing is not the right choice for your needs, the dealer can help you find and purchase a vehicle that is suited for you. If you have questions about the leasing process, contact us so we can help.