Contract Periods And Your Leasing Contract
The most common leasing period tends to be over 3 years as this in many cases seems to be the best balance between keeping the monthly cost down, as well as still having a reasonable amount of residual value left in the car at the end of the contract period..
Shorter Time Frames
Leasing a car over a shorter period, i.e. 2 years (most leasing brokers or dealers will not entertain 1 year deals. They tend to only appear as special offers to clear vehicles from time to time.) will be more expensive as most of the depreciation of a car will occur in the first year of ownership. Often the third years cost is in affect the cheapest as all the deprecation is spread over 3 years rather than 2.
Remember leasing a vehicle normally means taking out a finance contract that covers the difference between its value new and what the estimated value will be at the end on the contract period.
Longer Contract Periods
This is normally a cheaper option, to lease over a longer period, but this can also have negative impact that varies with different makes and models. Some models are in demand for 10 years or more after manufacturer with retailers and private buyers alike, keeping residual values high. But there are some models that after that 3 year period, their values just plummet. This may mean that any long term leasing benefits are wiped out by plummeting residual values in year 4 and beyond.
Only by using car price data can reasonably accurate residual amounts and monthly leasing prices calculated. It is the finance company that often takes the hit should residual prices fall greater over the contract period than originally calculated.
It may be worth asking for a price for 2, 3 and a 4 year leasing contract, to decide what really is the best option for you. You can do this within the "notes" section of the Leasebam form.
