The first step in leasing a car isn’t choosing a make and model, making a list of features you want or even deciding what type of vehicle you’re looking for. Instead, the first thing you need to do when leasing a car is to determine how much you can afford to spend.
Financial experts typically recommend that people spend no more than 20 to 25 percent of their monthly income on automotive expenses. And that refers to take-home income, not your gross income before taxes.
Your lease payment is only one part of those automotive expenses, though. You would also need to include the amount spent on fuel, maintenance and insurance in that 20 to 25 percent figure. Those expenses can vary depending on the type of car you get, so you’ll want to look at:
- How many miles per month you drive
- The gas mileage of the cars under consideration
- The typical price of gas in your area
- Whether maintenance and repairs are covered under warranty
- Any differences in insurance costs, such as the higher rates charged for sports cars
- Any down payment or leasing fees
Figuring a budget
Of course, there are exceptions to the rule, and there may be reasons for you to spend a higher (or lower) percentage of your income on leasing a car. Having a very high or very low income, for instance, would affect the percentage you could or should spend.
The best way to calculate how much you can afford is to put together a budget of all your other expenses, such as housing, food and investments. Whatever is left after accounting for all non-car expenses will be the amount you can spend on leasing a car.
One way to save money when leasing a car is to go with a car someone else has previously leased. This lets you avoid down payments and initial fees, budget for a shorter lease term and often get lower monthly lease payments. To find out which vehicles you could afford through a lease transfer, contact us at Swapalease.com.