|
|
|
| Article: Should I Lease Or Buy My Next Car? |
| What you should know before leasing a vehicle. |
| |
Q: Do I own the vehicle when leasing?
Q: Is leasing cheaper than buying?
Q: Is leasing a vehicle right for me?
Q: Why do businesses sometimes lease vehicles instead of buying?
Q: What up-front costs can I expect to pay?
Q: Can I return the vehicle before my lease is up?
Q: Am I responsible for damages to a leased vehicle?
Q: If I damage a leased vehicle, should I repair it?
Q: What mileage restrictions apply to leased vehicles?
Q: What if I go over the mileage limit on my leased vehicle?
Q: How do I know how many miles I will drive a year?
Q: How does a higher mileage limit affect my lease payments?
Q: What is the typical term of a lease?
Q: What should be my down payment on a leased vehicle?
Q: Can I negotiate the price of a leased vehicle?
Q: What am I obligated to do when turning on a leased vehicle?
|
| The Top 10 things to know when leasing: |
| |
1. What is the price of the vehicle? Negotiate the price if you can.
2. What are the available terms (lengths) for the lease?
3. What are the available mileage limits? You can adjust it to suit your driving habits.
4. What is the penalty cost per mile for going over the mileage limit?
5. How much will the vehicle be worth at the end of your lease (residual/balloon payment)?
6. What condition must the vehicle be in upon return? What is normal wear and tear?
7. How long is the vehicle under warranty?
8. Are you responsible for paying the personal property tax on this vehicle?
9. What are the up-front fees? (Tax, title, registration, down payment etc.)
10. How does adjusting down payments, term and mileage affect monthly payments?
|
| Vehicle leasing question and answer guide: |
| |
Q: Do I own the vehicle when leasing?
A: No, you do not own a leased vehicle. You are however entitled to use it as if you owned it and are responsible
for it. You must return it at the end of the lease term in a condition suiting those outlined in your agreement. The company you are financing
it through usually owns leased vehicle.
Although you do not own a leased vehicle, you are required to pay the appropriate personal property taxes in most situations.
Important:
Sometimes overdue parking violations and taxes will be sent to the financing company since they own the vehicle. Don't be surprised to see that
they may pay the amount, and charge you a fee for doing so.
-----------------------------------------------------------------------------------------------------
Q: Is leasing cheaper than buying?
A: If you are plan to buy the vehicle at the end of the lease, then its usually not. Leasing affords you lower monthly
payments than if you chose to buy that same vehicle. However, if you choose to finance your residual/balloon payment at the end of your lease
term, you will most likely pay more than if you had chosen to buy.
-----------------------------------------------------------------------------------------------------
Q: Is leasing a vehicle right for me?
A: Some people say you are throwing money away when you lease. Its like renting, you continue to pay but never own
anything. This is not totally true. You only lose the money you've invested if you choose to turn in the vehicle. However, many people lease
vehicles because of the convenience/luxury of driving a new vehicle every 2-4 years with lower monthly payments. These vehicles are usually
under warranty allowing most vehicle problems to be paid for by the dealer. You may even lease with all intentions of buying at the end of the
lease. This affords you lower monthly payments during the beginning of your loan. You may pay a little more in the long run, but you may not
be able to afford to buy the car outright.
-----------------------------------------------------------------------------------------------------
Q: Why do businesses sometimes lease vehicles instead of buying?
A: Most businesses can write off a lease as a business expense without having to claim those vehicles as assets, a
big plus around tax time. Additionally, the vehicle will usually have a lot of miles put on it. It helps to have a newer dependable vehicle
that is most likely under warranty.
-----------------------------------------------------------------------------------------------------
Q: What up-front costs can I expect to pay?
A: You will most likely encounter the same fees when leasing as if purchasing. Such fees may include: down payment,
first month's payment, taxes, registration and various other fees.
-----------------------------------------------------------------------------------------------------
Q: Can I return the vehicle before my lease is up?
A: You can return the vehicle, but there is usually an early termination fee that you will have to pay. These fees
are usually significant enough to discourage customers from doing this.
-----------------------------------------------------------------------------------------------------
Q: Am I responsible for damages to a leased vehicle?
A: Your lease agreement will outline the condition that the vehicle is expected to be in once the lease term is up.
Typically, normal wear and tear is acceptable. Things such as minor interior stains, minor exterior nicks and scratches and anything resulting
from normal use of the vehicle. You will also be held responsible, if your tires are not in normal condition when returned. Most people have
to replace their tires during a lease, especially on SUVs and Trucks.
-----------------------------------------------------------------------------------------------------
Q: If I damage a leased vehicle, should I repair it or let the dealer take care of it once returned?
A: You should have the vehicle repaired before returning it to the dealer. A dealership will typically charge you
far more for the repairs than you could get yourself. They may factor in service fees, or even estimate what it would cost to bring it back
to perfect condition.
-----------------------------------------------------------------------------------------------------
Q: What mileage restrictions apply to leased vehicles?
A: Most lease packages will offer 10,000 to 15,000 miles a year to be put on the vehicle. This means that at 15,000
miles a year, you should have no more than 45,000 miles at the end of a 3- year lease.
------------------------------------------------------------------------------------------------------
Q: What if I go over the mileage limit on my leased vehicle?
A: Your lease agreement will have a cost per mile over your limit that you must
pay. This usually ranges from .10 to .15 cents a mile. Take a look at the following example:
45,000-mile limit
48,500 miles on the returned vehicle
.10 cent per mile overage charge
48,500 - 45,000 = 3,500 x .10 = $350
(You would be required to pay $350 at turn-in)
Important: Make sure to note the mileage on the vehicle when you purchase it. This can be deducted from your overall
mileage at the end of your lease. It should be added to your contract at the time of purchase.
------------------------------------------------------------------------------------------------------
Q: How do I know how many miles I will drive a year?
A: If you have a previous car, estimate the mileage that you have put on it over a given time. If not, 12,000 miles
a year is average for those who do more than just drive a couple miles to work everyday. If you travel frequently, you should bump the mileage
limit up to 15,000.
------------------------------------------------------------------------------------------------------
Q: How does a higher mileage limit affect my lease payments?
A: Higher mileage limits usually increase the price, but it better to pay a little more each month than to be stuck
with a huge overage bill at the end of your lease term. You may also worry about your mileage a lot during your last year if you are coming
close to your limit. Some people go as far as to stop driving their vehicle once they reach their limit, even with months left on their lease.
-------------------------------------------------------------------------------------------------------
Q: What is the typical term of a lease?
A: Typically, lease terms run 2-4 years. Sometimes you are even able to extend the term a few months to lower your
monthly payments. You will pay more, but luxury of more manageable monthly payments may be worth it.
-------------------------------------------------------------------------------------------------------
Q: What should be my down payment on a leased vehicle?
A: The more you put down, the lower your monthly payments will be. Although you must remember that you will not own
the vehicle at the end of the lease. Putting down $2,000 instead of $1,000 may reduce your monthly payments, but you will not see that money
if you return the vehicle. Compare the total cost savings of putting more money down and determine if having that $1000 in you bank account
is better than saving $40 a month.
-------------------------------------------------------------------------------------------------------
Q: Can I negotiate the price of a leased vehicle?
A: Most people think that if you are leasing, the lower monthly payments are enough incentive. This is not always
the case. You may negotiate the overall price of a leased vehicle. This may help you out if you decide to purchase the vehicle at the end of
the lease.
-------------------------------------------------------------------------------------------------------
Q: What am I obligated to do when turning on a leased vehicle?
A: You must provide the vehicle to the dealer at the appropriate date specified on the lease agreement. You must provide
it to them in the condition specified in the agreement. You will be expected to pay for excess wear and tear, damage, and overage in the total
mileage limit.
-----------------------------------------------------------------------------------------------------------
|
|
