Debt Tips   

Leasing Cars

More complicated than buying

When you lease a car as opposed to buying it, things can get a bit more complicated. Since leasing is basically borrowing, you may not want to consider it at all. But, if you are going to lease a car always remember that leasing is essentially like financing part of a car’s life. There are really 3 main parts to a auto lease – the capitalized cost (purchase price), the money factor (the interest rate), and the residual value (what the car is worth when the leases term is finished). You need to be familiar with these 3 things when you are considering a car lease because any changes to them will change the lease payments for you. When you are considering a lease ignore the payments and negotiate the capitalized cost just like buying any car. Then the money factor just as you would if you were buying any car with a loan. Let the payments take care of themselves.

Fees are all around you

Be certain that whenever you enter a lease agreement that you completely understand the fine print. There are many possible penalties and fees added when any part of your agreement is broken. Leases all have mileage limits, never go over them. When you do, there are stiff fess involved (just like when you rent a car on vacation if you do not have unlimited miles). Average car return fees are about $1,000.00. Meaning, the typical cost compiled on a leaser when they return the car at the end is around a grand.

Negotiate the value of your trade in first

Honestly, trading in any used car is a bad idea deal wise. You almost never get the best value. If the dealer does give you a great deal, that is because some extra money is tacked on to your car loan. Beware. You are usually better off selling your used car on your own, so apply this knowledge when considering a lease agreement. Never be afraid to ask uncomfortable questions when dealing with any car negotiations – new, used or leased. You will only benefit if you do your homework and apply that knowledge to your purchase or lease agreements. Buying and leasing a car is never like walking into a department store to buy something. Car dealings are always negotiable. Because of this, there are many gray areas involved. Know what you are getting into ahead of time especially when leasing.

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