Leasing a Car in Arkansas
Leasing a car in Arkansas will save you money on monthly payments. Make sure that you know the benefits and drawbacks before you sign off on a lease agreement.
Written by Brittni Brinn
Reviewed by Jessica Barrett
If you live in
Arkansas
, leasing a car is an appealing option. From minimizing your monthly costs to giving you the freedom to walk away debt-free at the end of a lease, there are a lot of benefits to leasing a vehicle.It’s becoming more and more popular to lease a vehicle instead of buying. In the United States, around 1 in 4 cars on the road are leased vehicles. Although there are plenty of benefits to leasing a car, there are also details to be aware of before you sign off on a lease agreement.
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Reasons to lease a car in Arkansas
Even though Arkansas has a relatively low cost of living compared to the rest of America, the average costs of maintaining a car are higher than average. The average cost of car ownership in Arkansas is $2,822 a year—and that doesn’t even include
car insurance
.For people who want to avoid the extra expenses of car ownership, leasing a vehicle is a viable option with plenty of benefits. For one thing, leased vehicles require lower monthly payments and have more flexible payment structures than buying a car outright.
Most dealerships require you to have at least the
state minimum insurance coverage
on leased vehicles. This can add to the cost of a lease, but it’s still less expensive than owning a car. Car maintenance and some repairs may be covered under the vehicle’s warranty or another part of the lease agreement. A lease means you don’t have the added stress of trying to
sell your car in Arkansas
when you want to try another model: when the lease is up, you can decide if you want to renew or you can move on to another vehicle with no hassle. If you want to keep the leased vehicle, you may have the option to buy it outright
.Flexibility
A lease is often more financially flexible than a loan.
With a lease, you get to decide the terms and duration. While a
loan can impact your credit score
and lead to debt, leasing a vehicle allows you the freedom of driving without the pressure of huge repair costs. When a lease ends, you can move on from the vehicle to a new plan or car that suits you.Lower monthly cost
In general, monthly payments for a lease are less than loan payments. Because some of the car’s maintenance and repairs are covered by the lease agreement, you’ll save even more on monthly costs. For the 83% of people in Arkansas who drive to work on a regular basis, leasing a car makes sense.
MORE: Car inspection in Arkansas
No loss on depreciation
With a lease, you don’t have to worry about a car losing its value. Your monthly payments cover the vehicle during its golden years before it starts to wear out from miles of use. Because you won’t have to worry about the vehicle after your lease is up,
depreciation of value
is a non-issue for leased vehicles.Key Takeaway: Lease payments are often less than loan payments and allow you to walk away from a vehicle once the lease is up.
What to look for when leasing a car in Arkansas
If you’re new to leasing, you’ll want to make sure you read through and understand your leasing agreement before you sign it. A lease is a longer-term commitment than
renting a car
. Even though you have the flexibility to choose a new vehicle once your lease is up, agreements usually run from three to four years.There are different kinds of lease agreements that determine what happens to the vehicle when the lease ends.
- A closed-end lease means that at the end of the lease the vehicle becomes the sole responsibility of the dealer, letting you move on without any further obligations
- Some leases allow you the option of purchasing the car near the end of the lease term withan open-end lease.
Many of the terms of your lease are negotiable. Ask questions about terms that you would like to change or that seem suspect. Here are some terms to know and red flags to watch out for when negotiating a lease agreement.
Terms to know
- Capitalized cost: The “cap cost” is the amount of money your monthly payments are based on. This can reflect the retail price of the vehicle and may be increased by add-ons like insurance,vehicle registrationfees, and service contracts. You can negotiate this price down to lower your monthly payments.
- Money factor: The financing charge you will pay on your lease. This is similar to the interest rate on a loan and will often appear as a small decimal. To see the actual percentage, multiply it by 2400. For example, a money factor of 0.002 is actually a financing rate of 4.8%.
- Mileage cap: This is the maximum mileage you are allowed to run up on the leased vehicle. Costs for going over the mileage cap may be per mile or grouped by how much you exceed the mileage cap.
Red flags to watch out for
When you’re negotiating a lease, take your time and speak up if you have questions. Make sure any agreements between you and a car dealer are made in writing. Watch out for dealers who:
- Ask you to sign a lease the first time you meet
- Only want to talk about monthly payments instead of addressing money factor and mileage cap
- Include a lot of extra fees in your cap cost
Key Takeaway: Most terms of your lease agreement are negotiable. Make sure you ask questions and understand the terms of your lease before you sign off.
How much should I expect to pay?
According to
Statista
, the average monthly lease payments in 2020 increased to $460. The monthly payments on your leased vehicle may be higher or lower, depending on the cap cost and other additions to your lease agreement. At most, your car payments should take up 20% of your monthly income.
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FAQs
How long is the average lease term?
The average lease agreement is three to four years. Lease agreements are longer commitments than just renting a car. Before you sign off on a lease agreement, make sure it fits your needs in the long term.
Is leasing a car a good idea?
Leasing a car can help minimize your monthly costs, but it’s not for everyone. Although your maintenance and some repairs will be covered by your lease agreement, your mileage and customization options will be limited.
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