Car leasing is the process of paying an agreed amount of money to a lessor to lease a vehicle over a set period. The lease payments are based on the depreciation of the vehicle over the period of the lease, plus other taxes or services you have agreed on with the lessor. Car leasing has become much more common due to the cheaper costs involved compared to financing a new vehicle and the reduced responsibility.

So how does car leasing work? The guidelines below detail the steps required in order to lease a vehicle.

Obviously the first choice you need to make is what vehicle you require. There are countless different brands and models to consider, though if you are looking for a vehicle for the lowest possible lease payments, then you must look at cars with low depreciation rates. American cars generally depreciate at a higher level than European or Japanese cars. Some of the lowest depreciating brands are Mercedes, Honda and Volkswagen, though not all models under those brands perform equally.

The next step, after you have chosen your desired brand, is to choose the company you want to lease a vehicle from. Car dealerships often advertise lease specials in local and national newspapers, so that is a good place to start. You must be conscious of the prices advertised though as an offer that looks too good to be true, often is. Find out if especially cheap promotions include hidden fees, local taxes or whether you are required to keep under a low maximum annual mileage.

The next step is to decide on the length of lease agreement you require. It is possible to lease vehicles for two, three, four or even five years, but most people tend to limit their lease to three years for various reasons. The main reason why three years is most common is that vehicle warranties tend to be limited to three years, which means your leased vehicle will be in warranty for the whole time it is being leased. Although a five year lease would mean cheaper payments, you would have to think about extended warranties and higher maintenance costs.

Lastly you need to decide on the exact model you want, including the trim level and any optional extras and then work out the lease payments. It may help to try to work out the possible lease payments yourself or by using an online lease payment calculator. Once you have an idea of how much it should cost, shop around with different dealers to try to find the best possible deal.

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