Car prices have been skyrocketing since last year. And purchasing a new car can be financially draining for you. Yet leasing looks good on paper. But you know what’s better? Extending your existing car lease. If your lease period is about to end, it is wise for you to extend your car lease till car prices decline. It is a feasible, practical, and perfect alternative if your leasing company allows it. Read to know more.
A brief on car leasing
Leasing allows you to drive a car under specified terms and circumstances. When you decide to lease, you should pick the car you want to lease and then negotiate the lease conditions. You’ll most likely be asked to pay acquisition fees when signing the car lease contract.
A short-term car lease can last between 12 and 24 months, while a long-term lease can last up to 60 months. If you want to extend your lease, all you got to do is request an extension. A leasing company can decline your request, but you still get an opportunity to negotiate.
Also read: How To Buy Out A Car Lease: All You Wanted To Know
When should you extend a car lease?
Extending your lease is a good idea if:
- You still haven’t found the perfect car, and you don’t want to decide too quickly.
- You need a little more time to finish services or repairs, so you don’t have to pay extra.
- You’ve ordered a new car to replace the one you’re leasing, but it hasn’t arrived yet at the dealership.
What should you consider before buying your lease?
If you are unable or unwilling to make a down payment on your leased vehicle, you might reconsider purchasing it. With no down payment, your monthly payments may be expensive or even unmanageable for your budget — or you may end up upside down on your new loan, owing more on the automobile than it is worth.
Some lenders provide lease buyout loans. Remember to look around for a loan with the best conditions for your particular scenario. Longer loan terms typically result in lower monthly payments, but an increase in total interest paid over the life of the loan.
Also read: Leasing Vs. Buying A Car: How to Crack the Puzzle
What are your car lease extension options?
Informal lease extension
An informal extension is often a short-term fix that helps make the change from one lease to the next go more smoothly. To do this informally, you need to call your leasing company and tell them you wish to use the car after the lease is up. For an informal extension, the company must agree to it. The original contract must be followed when making monthly payments. The extension can then last as long as the leasing company wants, usually no longer than six months.
Formal lease extension
For a formal lease extension, on the other hand, you have to sign a change to the lease agreement that is legally binding. The agreement starts as soon as the first agreement is over. A formal agreement could include new monthly rental fees and a new mileage agreement based on how much the car has lost value during the extended lease.
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What is the process of extending your car lease?
You should notify your leasing business that you wish to renew your lease formally or informally. Your leasing company may then analyze your request and confirm whether you are eligible or not for the type of extension you requested. If your extension is authorized, the leasing company will proceed further. You’ll need to sign a new contract to make the lease official in the case of formal extension.
Also read: How To Buy Out A Car Lease: All You Wanted To Know
Pros and cons of extending your car lease
Exemptions to car lease extensions
Your car leasing company got no obligation to approve your request. And here are some reasons why a request gets declined:
- The lessee has fallen behind on lease payments and is on the verge of defaulting.
- The leasing firm determines that the car must be recalled for other commercial reasons.
- There was an earlier agreement that has not yet expired.
- The individual did not correctly complete the lease extension application.
Extending your car lease is a great option when waiting for car prices to drop. But car lease extensions have their pros and cons. It’s always better to weigh them out before signing up for one. Make sure to communicate with your lender to avoid any confusion. And make the most out of it while you purchase your next car.
FAQ on extending a car lease
Can I just buy my lease instead?
Your current lease may let you buy the property instead of extending it. You might want to buy out the lease on your current car if it’s still in good mechanical shape or if it’s still under factory warranty. If you think this is the case, make sure to check.
Also, if you’ve driven your leased car more than the terms of the lease allow, you might be able to avoid expensive fines by buying the car. Also, buying your current lease could cost less than repeatedly exceeding the mileage limit.
Is it a good idea to extend a car lease?
In short, it depends. Extending a car lease can buy you extra months before getting a new vehicle. But you may be charged fees and penalties for extending the lease. It’s always better to weigh them before extending your car lease.
How hard is it to extend a car lease?
A lease extension is relatively simple to arrange. A single phone call to your lender is usually required to extend your term. If you don’t require that much time, request a 10-day extension. Most lenders will gladly oblige.
Can I keep my leased car longer?
Most automaker finance departments and third-party lenders will let you extend your car lease once for a set number of months (usually 12 or less) or on a month-to-month basis up to a maximum.
How do I ask for a car lease extension?
You will call your leasing company and tell them that you want to formally or informally extend your lease. Your leasing company may then look at your request and proceed if you are eligible for your request.
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