Welcome back to the topic week! Today is all about a general overview about the topic.
What is car leasing?
The moment you lease a car, you pay for a temporary use of a vehicle. There are two types of leasing. You can either set a contract based on the mileage you will drive, or on the value the car will have after the end of the defined timeline. Because the “km leasing” is much more attractive than the other, this is the thing we will focus on specifically in this series.
You go to a dealership, pick the car you want and make a leasing deal. The car can either be brand new and not even built, brand new and in stock, or just used already. Does it make a difference which one of the options you pick? Of course! But we will come to those kind of details later on in the week. For now, it’s just enough to know the options you have. And sure, some of the consequences are just logical, right?
Is the car not yet build, you can decide on how the car will look like and what kind of extras it gets. If it is already build, well, you can’t change the configuration anymore! Not a big deal? You will just take a used one? It always depends. In order to make money with producing cars, manufacturer let their costumers pay a lot of money for the extras. Meaning that there is a basic configuration of a car, but you may need additional things like a navigation system, a head-up display, or whatever you think that you will need. Sure, we all like those extras pretty much, but don’t forget about the costs! Otherwise it will be really expensive!
TIP: Be careful with the leasing of used cars! The original equipment manufacturer (OEM) is not subsidizing those kind of deals, therefore, the deals are most of the time pretty expensive and not really worth the money.
So far so good? Next in line, you need to know if you are going to lease the car as a private person or if you have a company and want to get the leasing car for the company. The difference? Well, you can of course save a lot of money with taxes and stuff. But honestly, I do not have any clue about that! But I bet, there a thousands of websites talking about this out there in the World Wide Web.
In order to lease a car as a private person and with the km leasing model, you basically need to know three things.
- The car you want
- The time period you want to have it
- The distance you will drive
Starting at a time period of 24 months, the contracts can go up to 48 months, sometimes even more, if necessary. But sure, how are you supposed to find out how long you want to take the car? It always depends on the costs, right? Yes and no! But we will come to that later on. While the time period is a rather tricky question to answer, the distance should be an easy one. If you have driven a car before, just calculate the distance you drove in average in a year. If you haven’t, well, ask family members and friends. Calculate the daily route to work and stuff like this.
TIP: Look at your past experience, ask family members and friends and figure out how many km’s you will drive in a year. It will make the calculation and comparing process later on just so much easier if you start at least with this number being already fixed.
What comes next? You can finally ask for a first offer! Living in the 21st century, the whole process is of course digitalized and will be done on a computer. For that, the guy from the dealership needs to make the right clicks in order to equip the car with everything that you want. Meaning that the car is getting all its features and functions that most of the time cost extra. After this, the computer will give you a first offer.
The first offer
The first offer is just that, a first offer. You will see how high the costs actually are and in which kind of an area the final price will be located. Sure, if the price is actually quite ok already, good for you! But please, don’t sign the contract yet.
The offer contains:
- A certain amount of money you pay upfront. (Is not necessary)
- A certain amount of money you will need to pay every single month until the end of the contract.
- The time period you will have the car.
- The distance you can drive a year
- Additional costs
Now, that you got the first number, you need to ask yourself if this is pretty much the price you expected, or if it is rather too high or too low. If it’s too high, there are ways how to get the number a bit smaller. If it is too low, don’t worry. There are additional costs coming up!
But thankfully not today!
See you next time!