Leasing
isn't a cheap and quick way to get a car. It makes sense for some
consumers, but for others, it is a money trap.
Leasing a vehicle became popular during the 1990's,
causing many people leasing headaches after a few years when they found
that they would be responsible for mileage overruns and damage to the
vehicle.
Leasing is ideal for you is you want
the latest make of a vehicle, you drive less than 15,000 miles a year and
you are very meticulous with the care of the car. Leasing offers you in
return lower monthly payments and allows a you the opportunity to drive a
more expensive car.
The keys to getting a good deal are
knowledge and strategy.
Ignorance of the terminology or the
basics is the main reason you will pay too much for a lease. In Florida,
the state attorney general's office has identified 40 types of leasing
fraud. If you don't know what you are looking at, you may be a
victim.
Being uninformed can cost you as
much as $4,000.
Keep in mind that often drivers pay
thousands of dollars more to lease a car that they wanted to buy. These
buyers are often talked into a lease without understanding how it
works.
Leasing gives a dealer more places to negotiate than
buying does. Make sure that you both agree on each detail along the way.
You must know what you are paying, when and for what before you sign the
lease.
A lease is basically the payment of
the difference of the new car value of the vehicle and the amount the
vehicle will be worth at the end of the lease, also called the residual
value. Call the bank or dealer to find out a car's residual value. Most
cars will have a value of 50% to 58% for a 3 year lease.
The capitalized cost is what must be
negotiated. The dealer often simply looks to the MSRP or sticker price.
You don't have to accept that. You can negotiate down the MRSP in a
purchase, and you can negotiate it down in a lease.
The capitalized cost should be
reduced by your trade-in, down payment or any manufacturer's rebates. It
will be increased if you trade in a car that you owe a balance on or if
you have to pay lease acquisition fees.
Often, a dealer will set the
capitalized cost higher than the MSRP - so watch out. This often happens
when you are trying to lease a vehicle that sells well. If you see that
the capitalized cost is higher than the sticker, rethink the situation.
You should also use the capitalized cost to shop
around for lease deals from other dealers.
There are a lot of numbers to figure, just like when
you are buying a vehicle. Having no down payment is fine, and it is
usually balanced out in the costs somewhere else in the lease. If you can
negotiate your way to a down payment and a shorter lease length and a
better mileage allowance, you are doing great.
Your lease will give you the option
of buying the vehicle when the lease expires. Have the costs written into
your lease. That figure, plus your total lease costs over the years, will
tell you what you are paying to buy the car in three years. Hopefully it
is less than just buying the car now.
Before you lease, decide if you will
buy the vehicle at the end of the lease. Go ahead and figure out what the
payments will be and how much you will owe. If the figure is crazy, you
probably aren't looking at the best deal.
Look and read every single word and
number. Make sure everything adds up and that you understand every detail
- before you
sign.
