Maybe you have just moved somewhere without streamlined city transit, or perhaps you have finally run mom’s old war-wagon into the ground. Whatever the reason, you now find yourself looking to finance your first car, but are overwhelmed by the many different payment options and sheer volume of information out there to process.
Next to your first house, buying a car is one of life’s most significant investments. For both car and home ownership, rental and purchase options exist. Most home buyers are encouraged to make an early purchase to begin building equity and save on empty rental fees over the long term, but is the same true of automotive ownership? Purchasing a vehicle all at once is not realistic for a large percentage of the population, and the benefits of car ownership are not as robust as those of the realty world. Without any reliable means of building equity in your vehicle, buying a car outright can seem like a less attractive option.
What about leasing a car?
An extended rental period with a purchase option offered when the contract expires, leasing your car is the equivalent of renting-to-own. In realty terms, renting-to-own a home is often thought of as an ideal balance of flexible terms and long-term investing.
Many prospective buyers light up at the thought of leasing their new Ford and are eager to find the best deals possible. It can be difficult to manage your excitement with the prospect of a new Ford looming overhead, but you must keep a clear head if you want to navigate a leasing endeavour filled with sales pitches and paperwork.
How does lease payment pricing work?
Your leasing payment is calculated using a convoluted formula that takes into account many different factors. Your monthly rate will be higher with short contracts, dropping lower as the length of time expands. There are some guidelines for car leasing contrast length that should be followed, and those will comprise the core of this piece. A number of other factors influence your monthly rate, including cap payment, finance rate, and your vehicle’s residual value, but a discussion of each is beyond the scope of this piece. Read on for some no-nonsense tips for how to bargain the best leasing length that will get you behind the wheel of your new Ford fast!
How long should my Ford car leasing contract be?
Leases are offered will short-term or long-term contracts:
- Short term leases are those spanning 6-24 months. These are typically chosen by those with money to spend who want their car now, but want the option of upgrading in the near future. A short-term lease will minimize your insurance costs over the long-term will also providing you the flexibility to make a change.
- Long-term leases commonly stretch into the 3, 4, and 5-year mark. These are very attractive to first-time buyers because they allow for diminished monthly payment rates.
The Golden Rule
As a concrete guideline, try never to let your leasing contract exceed 36 months. Leasing a car for more than 3 years has a number of drawbacks:
- Upkeep costs – As your car goes further into its lifespan, you will find yourself needing to invest in its upkeep and repair. It can be difficult to find a repairman who will not exploit “grey area” services to generate extra revenue, and even if you do, why would you want to be paying for the upkeep of a car that you do not currently own?
- Prolonged insurance payments – Longer leases may seem like money-saving options, but in reality they can cost you more over the long-term. The longer you extend your lease, the longer you are dealing with liability insurance, collision, and comprehensive with a zero deductible.
- Limited mobility – Breaking your lease can come with hefty termination fees if you decide to upgrade, relocate, or use other transit options. Once signed into a long-term lease, you need to either swap that lease for another, see it through, or pay the price.