The idea of leasing a car is appealing for many drivers because the cost to lease a new and/or higher-end car model is often more affordable than the cost of a purchase. However, according to Bankrate, there are five common mistakes that drivers make when leasing a car that end up hurting their pocketbooks more than they anticipated.
1. Overpaying upfront
According to Philip Reed, senior consumer advice editor at auto research site Edmunds.com, lessees often put themselves at risk by paying too much upfront when leasing a car. One of the ways dealers lure customers is by advertising low monthly payments for leased vehicles, but they make up for those low rates by asking customers to pay thousands of dollars upfront as a down-payment on the lease.
Unfortunately, in the event of an accident, insurance companies typically reimburse the leasing company the value of the car, but the upfront payment is unlikely to be returned to the lessee. Reed recommends lessees pay no more than around $2,000 upfront and instead opt for larger monthly payments.
2. Not getting gap insurance
The value of any car depreciates significantly as soon as it is driven off the lot. However, if a leased car gets totaled or stolen, insurance will only cover the current value of the car, which will often fall well short of the total lease obligation the lessee owes. The solution to this potential problem is something called gap insurance, which covers the difference. Reed advises every lessee to make sure their lease contract includes gap insurance.
3. Overlooking mileage driven stipulations
Another way that leasing companies are able to offer low monthly rates is by including…
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