Confused About Vehicle Leasing Options

If you confused about car leasing options join the club. Even the best of us find it tough to understand.

Auto shoppers interested in saving money often look into leasing a car rather than buying it. Without a proper understanding of the leasing option, some customers can end up paying more than they should to unscrupulous dealers. Leasing is a great option that helps people get lower payments on a new or late-model car.

An auto lease is much like renting a car, only for a very long time. To get a lease, auto shoppers make a down payment (also known as a cap reduction) and negotiate the payment amount. As with a car loan, the number of payments has affects the payment amount. Many times the downpayment can be included in your payment, so you will not have to put any money down. Your trade can also be the down payment if you have enough equity in it.

You could or should consider a lease if you trade in your car every every two or three years and you are sure you will only drive within the limits of the lease. Usually this is between twelve and 16 thousand miles a year.

If there is any chance you will go over the allotted amount of miles included in the lease be very careful. This can add up into a lot of money very quickly. Some people have even had to park their car for months as they could not afford the extra miles.

One thing lessees must realize is that they do not build equity in their vehicle. Also, they do not have any ownership in the car unless they exercise their option to buy when the lease ends. There have been many stories in the news lately of lease customers who claim they have been told they were buying the vehicle or would get an ownership position but this is not true of a lease.

Shoppers can get lower lease payments by extending the term of the lease, negotiating a better price and by buying a car with a higher resale value. A lower money factor can also reduce the cost of a lease. The money factor for a lease is similar to an interest rate for a loan. Dealers often avoid discussion of the money factor on a lease, a practice that often ends up costing customers a lot of money during the length of the contract.

In a lease there is a option to buy the vehicle at or near the end of the term but the option to buy usually costs much more than the true value of the car. Because leases often have an artificially high buyout price, most people who intend to buy their car would be better off with a loan. If you want to get a low buyback you can lease the car with a higher payment.

In the past this was sometimes done with the lease being in the name of a corporation on a car that does not depreciate as much as a normal car, like a Porsche 911 Turbo. Then the owner of the company would buy the car back at a much lower payment than the value of the car.

Like with anything else hard work pays off.

Some practices can help car shoppers have a good leasing experience. For example, leasing customer should never accept a lease that lasts longer than three years. This is essential to ensure that warranty coverage does not run out before they return the vehicle. If the warranty does run out, customers will assume the cost of repairing a car they will eventually surrender back to its owner. Also remember the miles allowed as we spoke of before.

Another good way to appraise a lease is to sum all the payments and then subtract the cap reduction from the result. This makes an easy job of comparing leases from different car dealers, so shoppers can improve their chances of getting the best deal.

Shoppers should be wary when the dealer presents lower monthly payments because they often come as a result of a higher cap reduction. That higher initial payment can be regarded as monthly payments made in advance. Cap reductions are not refundable and can make a lease an option that is more expensive than buying a car with a loan. One way to shop is to get all your lease payment quotes from the different dealers based on "no money down". This was everything is equal.

Prospective lessees should research the leasing process as well as the car, truck or SUV they want before they visit the dealer. Read some car reviews.Then you can search online for customer reviews for various dealers so they can learn in advance which ones surreptitiously increase the money factor on a lease, pack payments and practice other questionable schemes. Many dealers think they can get away with such tactics because shoppers are often unfamiliar with the leasing process.

When you lease make sure you are not starting off from the MSRP retail price. You should negotiate the starting price down to or below the invoice price just as you would if you were buying the car. These days you can also lease a used car so thats another great way to save money. Also ask if the dealers are offering any special rates on leases. There may be a great special on the car you want of the next model up.

While price quotes and invoice prices are freely available online from major services like zAutos and others; the serious shopper should also consider buying a computer software program that helps create leases. Many dealers use an application called Expert Lease Pro, so customers who learn that program can analyze and understand their leasing options. Armed with that software, customer can also consider online direct-leasing options that bypass dealers altogether. Online services can also help orchestrate lease swaps for people who need to get out of a lease before its terms were complete.

Leasing: a better deal for dealers?

It sure is, but only if you let them.

Dealers often push the leasing option onto their customers because they earn almost double the amount of money than they would on a traditional sale. Also, because leases last only two or three years, dealers have a chance to quickly gain repeat business. They may even try to sell leases based on faulty comparisons with loan terms.

To sum up, remember, you should do everything you would just as if you were buying that car. It's no different with a lease. First, don't buy the same day that you shop. Dealer love it when you buy on emotion, that's when they make the most money. That car, or one just like it will be there tomorrow, so be patient. Thats how you will get the best deal.

Next, remember you must negotiate the cost of the car you are leasing just like if you were buying it. get the invoice and get the price down before you talk payment.

Then you should negotiate the interest rate you are paying. Again just like if you you were buying that car you can get a lease rate at your bank of credit union. You should know before going to the dealer what they have to offer you.

Even with all the hassles leasing can be good for some customers who want to change cars frequently, want to avoid the maintenance cost of aging vehicles, and avoid the hassles associated with selling or trading a vehicle before buying another one.