Cars, Vans, Trucks, Quad bikes: Buying, Hiring Or Leasing A Car - "Smart Car Leasing for Beginners" Friday, 3 September, 2010

Home

Smart Car Leasing for Beginners

by Al Hearn

Car leasing is extremely popular because it provides an attractive method of driving an automobile that you might not otherwise afford. It allows you to make lower monthly payments than with traditional car purchase loans. About one out of every four vehicles driven by automotive consumers in the United States are leased.

But leasing is not for everyone. You should take the time to learn about leasing, and be sure it's right for you before making a decision.

What is Leasing

While a purchase loan is a method of financing the ownership of a vehicle, leasing is a method of financing the use of a vehicle for a specified time period. As much as it sounds like renting, leasing is different.

A lease is a formal contract with a leasing provider that allows you to drive the provider's car and only pay for the portion of the vehicle's value that you use up during the time you're driving it. You agree to pay for insurance, licenses, taxes, repairs, and maintenance.

The leasing provider retains ownership and title to the vehicle throughout the lease. At lease-end you can simply return your vehicle to the provider, or you may purchase the vehicle and continue driving it.

Benefits of Leasing

Leasing offers the following benefits when compared to purchase loans:

• Lower monthly payments
• More car, more often
• Minimum or no down payment
• Smaller sales tax bite in most states
• No used-car headaches at end

Who Provides Leases

Contrary to popular belief, car dealers do not lease cars. Banks, credit unions, and financial divisions of major car manufacturers lease cars. Dealers simply act as agents of a leasing provider, such as Ford Motor Credit or GMAC, to arrange the lease on your behalf. Dealers typically work with more than one provider.

Once you've picked out the car you want, the dealer sells it to the leasing provider, who leases it you. It's not necessary, nor is it always the best choice, to use the "captive" leasing company chosen for you by the dealer.

You can arrange for lease financing yourself with an independent leasing company, bank, or credit union after you've negotiated the price with a dealer. Some lease providers even work with dealers to acquire vehicles for you at reduced prices, saving you money and the stress of negotiation.

Who Should Lease

Leasing makes sense for many automotive consumers, but not for others. Here's how to determine if you are a good leasing candidate:

• Are you willing to trade ownership of your vehicle for lower monthly payments? Leasing is a great way to lower your payments or drive a better car for your money, but you must be comfortable with having no ownership of your vehicle, unless you purchase at lease-end.
• Can you stick with your lease until the end? Leases require you to commit to driving your vehicle for a specific number of months — typically 24, 36, 48, or 60 months. If you feel your lifestyle, your finances, or simply your taste in cars may change significantly in future months, you may not be a good lease candidate. To end a lease early is usually troublesome and costly.
• Do you drive more than 15,000 miles annually? If your answer is yes, you may not be a good candidate because lease contracts are typically written with an annual mileage limit, typically 10,000-15,000 miles. If you drive more than the specified number of miles you will pay a fee for every mile over the limit.
• Do you typically keep your vehicles in good condition and change vehicles every few years? If so, you may be right for leasing. Lease providers require you to keep their vehicle maintained and repaired, with no more than normal wear and tear. If you don't, you'll be charged at the end of your lease.
• How is your credit rating? If you have a history of paying your bills on time and don't have excessive debt, you are a good lease candidate. Otherwise, you may be required to make a large down payment and pay higher finance charges or, worse, be refused the opportunity to lease.

Shopping for a Lease

The most important element of a good lease deal is the price of the vehicle. Regardless of whether you buy or lease, you should always get the best possible price first. When leasing, this price becomes the capital cost, or "cap cost." Prior loan balances and fees may be added. Rebates, discounts, down payments, and trade-in credit are subtracted. The lower the capital cost, the lower your monthly payment. This is the only element of a lease deal that a dealer directly controls.

The remaining elements of a lease — money factor, residual value, and related fees — are controlled by the lease provider and are not negotiable.

Since a lease is simply another form of financing, interest charges apply. These interest charges are known as "money factor." Money factor is expressed as a very small number such as .00375, which is equivalent to 9% annual interest rate. Again, a small money factor results in lower monthly lease payments.

Residual value is an estimate of a vehicle's wholesale value at the end of a lease term. The longer the lease, the smaller the residual value. Your lease payment is primarily determined by the difference between cap cost and residual value, which is the amount that the value of the vehicle depreciates during the lease. The higher the residual value, the lower the lease cost.

Sales tax may also be included in your monthly payment, depending on the state you live in.

You can easily calculate car lease payments, once you know the key factors, using the Lease Calculator by LeaseGuide.com.

Leasing Fees

There may be certain fees associated with your lease. The fees that lease providers charge vary both in kind and amount. One of the most common is an "acquisition fee", which is an administrative charge for the work in initiating a lease. Another common fee is a disposition fee, usually charged at the end of your lease when you return your vehicle.

You may also be charged at the end of your lease for excessive mileage, damages, and unusual wear-and-tear.

At the beginning of your lease, you will be asked to pay the first month's payment, a security deposit, a down payment, if any, and applicable miscellaneous fees associated with licensing a vehicle in your state. You will also be asked to show proof of insurance.

Driving Your Leased Vehicle

Your vehicle must be driven and cared for according to the terms specified in your lease contract. Generally, this means keeping the vehicle in good condition, using it for lawful purposes, maintaining insurance, and allowing it to be driven only by licensed drivers.

Other articles you may find interesting:

What To Look Out For When Test Driving A Car

by Pete Lance

Test-Driving is usually done on any model vehicle that you wish to buy to find out whether that model is suitable for your requirements. You might have some presumptions about a particular model but everything would be cleared when you test-drive a car of that model.

The salespersons often give you facts and figures about the car being very fast and being very good (\u2018blah blah blah\u2019), and it will be difficult for you to track them. So you have to look for yourself whether that car suits you.

See whether you can get into the car easily. You need to check whether you are comfortable while you
Read this article in full

Buying A Used Car - The Wise Way!

by Ryan Larson

I have always purchased my cars used. And each time, I got a great deal. Don't think I counted on luck, though - no siree. There are a few "musts" for making sure you don't end up drinking "lemon"-ade.

Spending a little time now may save you serious money later. Check Consumer Reports on the safest cars out there. Looks are one thing, but don't ignore safety.

Go to a reputable car repair shop and ask if you can bring the vehicle by for a look-over. While you're there, ask what cars they have to repair most often. Take heed. Also, ask what the inspection includes,
Read this article in full

Consumer Tips: Before Purchasing A Used Car…

by News Canada

(NC)-Be aware of the following:

• Inspect the car in daylight and good weather. Bring someone you trust along to help you make a thorough appraisal;
• Don't expect perfection in a used car. Compromise on minor problems you can fix yourself, but don't overlook serious defects;
• Make safety a major priority. Older vehicles may not be equipped with airbags, child safety seats, seat belts, anti-lock brakes or security systems. Determine your locality's vehicle safety requirements for cars, mini-vans, recreational and sport-utility vehicles and other vehicles before you buy;
• Road test before you commit to buy. If you are not allowed to test drive the car,
  Read this article in full
  
  

  Used Car Auctions: Do's and Don'ts

  by Thomas H. Miller
  

  So you are looking for a car or truck, but you're tired of running around town and finding other people selling their "headaches" through the local classifieds, or dealers offering "cream-puffs" for inflated retail prices. All you want is a good vehicle for a good price. Period. Does such a deal exist? Yes, indeed! Repossession auctions are becoming more and more popular across the country. I have been attending them for over 20 years, and have purchased many cars and trucks at bargain prices - everything from a brand new car (still with the window sticker on it and 3
  Read this article in full
  
  

  How to Check a Used Car

  by Dave Zegers
  

  If you do not have the money to buy yourself a brand new car maybe it is an idea to buy yourself a second hand car. If you don't mind that the car has been used before by someone else, then you can get some great deals. All you have to do is pick up a used car listing to see that brand new cars lose anywhere from 30 to 40 percent of their original price in as little as two years. That's a pretty steep number. Here's another number: 65 percent - this is the amount you save if
  Read this article in full
  
  

  
  
  
  
  

  Web site design by: TheWebsiteDesign.Co.UK

  Copyright ©2010 TWSD Services, All rights reserved