Tips to help you understand about car leases

If you find it difficult to understand the terms in the world of car leasing, then you will need to do a little bit of research comprehend the terms. If you not you might get into a little bit of trouble.

In order to decide if you want to lease the next car, you need to know the financial terms and its components. The contracts might looks very complicated but it is very easy if you know the terminology. You might even be able to read it on your own and not need an attorney to even go through it. You will definitely get confused if you do not understand the components.

During the lease, remember that the vehicle does not belong to you. The financial organisation that is actually helping you finance the lease is the sole owner. You will need to ensure that you do your negotiations done right with the car leasing Singapore firm and the car dealer and to make sure that you can afford the payments.

The five important elements of a car-leasing contract:

Capitalized cost

This term is the price that has been agreed upon for the vehicle. After you making the down payment or do a trade-in, a capitalised cost reduction will happen once the financial investor will pay the balance.

Residual value

This is the estimate of the value of the vehicle and how much of value it will have at the end of the ease. The value is calculated as a Manufacturer’s Suggested Retail Price and afterwards converted into a dollar value.

Money factor           

This is also known as the lease rate, which also the same rate as the annual percentage rate or APR in short, in a loan, and is expressed as a fraction.


Term means the length of the lease. This is usually stated in months unless mentioned otherwise.

Mileage allowance

The allowance for mileage is defined as the how many miles that the one will be able to drive in the vehicle without having to pay any penalties. It will be indicated as miles per year, which can be up to fifteen thousand. If you really want to purchase additional miles this can be done too but you will have to pay the lease car firm before.

Learning the terminology will help you discuss and further negotiate a better deal for you and for you wallet. Do not be afraid to voice your opinion, if not you will be the one who will lose out on the investment.

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