| What you
should know before leasing a car. |
| |
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
planning 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.
-----------------------------------------------------------------------------------------------------------
|
|
|
|
