While there are a number of benefits associated with leasing a car, there are also some critical points to keep in mind before ever signing one’s name on the dotted line of a lease contract. A few elements of the technical jargon the owners of the vehicle may spew out at lessees may be so confusing that the customer walks away without a car or gets more than he or she bargained for. In times like this, it is critical that the person entering the lease understands the most critical points of a car lease and what each particular section means.
Statement of Disclosure
It is a Federal law that all vehicle leases have some sort of a statement of disclosure. There are also a variety of sub-categories that are required to be covered in the lease agreement. This way, the lessee knows exactly what he or she is dealing with, and from there can decide whether or not a particular lease agreement is a good deal or not. The statement of disclosure is the one part of the car lease that outlines elements such as how much the monthly payments will be, how much money is due upon signing, a statement about the penalties of early termination, an explanation about penalties related to wear and tear, and many other factors that essentially outline payments and other information about the vehicle.
The next element of a car lease is the section devoted to insurance requirements. In a typical lease contract, one will see that there is a specific amount of coverage the lessee must carry in order to lease that particular vehicle. In most cases, companies would like to see those who enter into a vehicle lease carry $100,000 for death or liability insurance, $300,000 per occurrence, a property damage policy of $50,000 and no more than $500 for comprehensive and collision insurance.
Penalties for Damages
If the leased vehicle incurs too much wear and tear or is excessively damaged, there are often significant monetary penalties that the lessee must pay. This is because car dealerships expect the vehicle to be returned to them at the end of the leasing period with no more than an estimated amount of normal wear and tear. Anything considered to be above normal may be subject to inspection and immediate requirement of payment from the lessee. If the car is stolen, there is a fee for that as well, unless the lessee has gap coverage on the vehicle.
Penalties for Too Much Mileage
If the person leasing the vehicle drives it too often and puts an excessive amount of miles on the vehicle, he or she will be required to pay a significant monetary penalty to compensate for the mileage placed on the car.
Lessees who break the car lease agreement before the lease period is up may also be subject to a certain amount of monetary penalties including fines and fees for backing out of the contract early. This is generally the most damaging factor in a car lease.