When you sign a lease agreement, you are financing the vehicle for a certain period of time. After the rental period is up, you can purchase the car or hand it over to the dealer. Car rental is a really useful option for people who aren’t interested in keeping their vehicle for a long time. The text highlights five mistakes people make when renting a car.
Not Signing Up for Gap Insurance Coverage
Gap insurance coverage protects the client from paying out of pocket if the sum insured is less than the losses incurred during compensation. Insurance companies normally pay the price of the car at the time of the loss. This creates a problem for the lessee when the depreciation and interest rates paid when financing the car are less than the amount owed at the time of loss or claim. You should ask if the contract includes this form of insurance coverage before signing the contract.
Paying Large Amounts of Money Up Front
Most people are attracted by the low monthly payments advertised on rental agreements. However, most dealers charge a considerable amount of money up front to pay off most car rentals. Paying large amounts early is not recommended. If the vehicle is stolen or involved in an accident within the first few months of the rental agreement, the insurance company reimburses the renter and not the renter. You must compare a few ICL car rental deals and signing up for rental contracts that charge a low initial fee.
Underestimating Mileage
Rental contracts limit users to the number of miles they can travel in a year. Generally, mileage is limited from 10,000-15,000 miles; an extra fee will be charged if the rider exceeds this limit. Monthly payments normally increase to reflect the higher limit. Some leasing companies require clients to make prepayments to meet excess fees. Fees vary from company to company and add up pretty quickly if you are all the time on the go. You should carefully assess your driving habits to ensure they’re within reasonable limits. You can ask your dealer for increase mileage if you think you’ll exceed this limit. If you make a prepayment, ensure there’s a clause included in the lease for reimbursement of unused miles.
Being Reckless with a Car
Renting a vehicle is more involved than buying one. This is because you are required to return the car in the same condition as when you bought it, ie keeping the vehicle free from scratches, fabric stains, dents, dings, cigarette marks and other elements that can cause wear and tear. The leasing company may make some exceptions, for example, if the scratch is minor, no penalty applies. However, if the vehicle is excessively damaged, an extra fee will be charged. The leasing company can send you a repair bill at market rates if the car is badly damaged.
Focus on Monthly Payments
The rule of thumb is to focus on the total cost of the vehicle rather than your monthly expenses. If you are using a loan to service rent payments, estimate your spending limit to determine the type of car you want to buy. Take your monthly payment, run it on the loan calculator based on the loan terms and subtract the estimated fees and taxes to determine your spending limit.
