Steps to Lease Your First Car
Many car shoppers incorrectly assume that leasing is only an option for new car buyers. If you’ve never leased a vehicle before but you’re currently in the market for a preowned car, truck or SUV, you may want to consider leasing.
There are several benefits to leasing a preowned vehicle. The lower valuation of a used car means your monthly payments will be lower. The reduced valuation at the end of your lease term might also let you purchase the vehicle for a greatly reduced price.
Easterns Automotive is here to help if you’re unfamiliar with the leasing process.
How Leasing a Used Car Works
- Determine how much you can afford to pay each month. This step isn’t all that different from getting an auto loan. Look at your monthly budget and decide what you can reasonably spend on transportation before you start shopping for a pre-owned vehicle to lease.
- Decide what type of car you want. What’s important to you in a vehicle? Good gas mileage? Safety features? Functionality and storage? One of the benefits of leasing a pre-owned car from Easterns Automotive is our diverse inventory of used cars, trucks and SUVs. You’re sure to find the perfect vehicle at one of our eight locations in the Washington DC and Baltimore areas.
- Consider looking into how different vehicles might impact your insurance premiums. Certain vehicles might increase or decrease your monthly payment based on things like valuation, age, safety features and vehicle type.
- Test drive cars you are considering. You should treat your lease shopping experience just like you would any car buying experience. Visit a dealership and test drive the cars you’re interested in leasing.
- Talk to Easterns Automotive about financing. Some people may need to finance a down payment on their pre-owned lease from Easterns Automotive. We offer competitive rates and strive to simplify your leasing experience by handling everything in house.
Can You Lease to Own?
Leasing is often a great deal for pre-owned shoppers in Washington DC and Baltimore because they get to use a reliable vehicle for years and then have the opportunity to buy it for a massive discount at the end of their lease term.
Both new cars and used cars that are being leased will be assigned a “residual value” – the estimated value of the car at the end of your lease. Lenders or third-party rating agencies determine what the residual value will be for pre-owned vehicles. You have the opportunity to purchase the vehicle you lease at the end of your lease for that residual amount.
Sometimes the residual value the lending agency sets is too low. For example, used car prices are particularly high due to COVID-19-related shortages. Someone who started their lease in 2019 will get to purchase their lease for the 2019 residual valuation, not the 2021 valuation.
With new cars you’re stuck with the residual value set by the manufacturer instead of the lender. It’s rare for people to get really great deals on leased new cars since those valuations are likely still high if the vehicle is only a few years old at the end of the lease.
Why Steep Depreciation of New Cars Makes Leasing a Bad Deal
Your lease amount is based on the valuation of the vehicle you’re purchasing. A new car’s value drops about 20 to 30 percent the first year you own it, but your lease payments will stay the same regardless.
Imagine leasing a new car worth $50,000, putting down a $5,000 down payment and getting a monthly payment of $575. A year later that car would only be worth $37,500. If you put down the same $5,000 on a $37,500 car your monthly payments might only be about $400. Unfortunately, you’re locked in at that $575 for the entire lease, regardless of how much the vehicle depreciates over the course of your lease term.
By the time you lease a pre-owned car, chances are the steepest slope of depreciation will be behind it. That means the depreciation in value three or five years later won’t be nearly as dramatic as it would have been had you leased a new car.
Learn More About Leasing a Great Used Vehicle from Easterns Automotive Group
Are you looking for an affordable way to get a great used vehicle? Do you want the option to buy the vehicle in the future at a discount? Leasing a pre-owned vehicle might be the best option for you. Call Easterns Automotive Group at 877-867-0641 or stop by one of our eight locations in the Washington DC and Baltimore areas.