glock92
07-31-2012, 03:05 PM
Car leasing can offer advantages and be an attractive alternative to buying, although it`s not for everyone, as we`ll discuss later. You must decide about the importance and priority of these benefits to you.
Lower Monthly Payments
Because you only pay for the portion of the car or truck that you actually use, your monthly lease payments are 30%-60% lower than for a purchase loan for the same car and same term.
No Down Payment
Car leasing provides the option of making no down payment, although you must still make the first month`s payment and official tag and registration fees. Some promotional lease deals require a down payment to get the deal.
More Car, More Often
Since monthly lease payments are lower than with buying, you get more car for your money and drive a new vehicle every two to four years, depending on the term length of your lease.
Fewer Maintenance Headaches
Most people like to lease for a term that coincides with the length of the manufacturer`s warranty coverage so that if something goes wrong with the car, the repairs are always covered.
How About Disadvantages?
The possible disadvantages of car leasing are the following:
Early Termination Cost
If you must terminate your lease before the end of your contract, the cost is usually very high, much higher than might be expected. However, cost can be minimized by making the right termination choices. See the Early Termination Guide in our Lease Kit. Most people end their lease on schedule and do not end early, which avoids all early termination costs.
Little or No Ownership Equity
The trade-off for low monthly lease payments is that you typically do not build ownership or trade-in value in your leased vehicle. However, it is fairly common that the market value of a vehicle at lease-end is higher than the purchase option price specified in the lease contract — which means you may have some equity trade value. It`s not unusual to end up with a few thousand dollars of unexpected equity.
Excessive Mileage Charges
If you exceed the mileage allowance in your lease contract, you will be charged for the extra miles at a specified per-mile rate, usually a reasonable $0.20 per mile. A large mileage excess could result in a hefty charge, even at a reasonable per-mile rate. You can reduce your exposure if you "buy" the extra miles you expect to drive at the time of lease signing. You avoid the higher end-of-lease charge this way. If you choose this option, you will be refunded for any unused miles.
Although leasing offers attractive benefits to automotive consumers, those benefits should be weighed against any potential disadvantages. There are pros and cons to be examined before making a decision.
Lower Monthly Payments
Because you only pay for the portion of the car or truck that you actually use, your monthly lease payments are 30%-60% lower than for a purchase loan for the same car and same term.
No Down Payment
Car leasing provides the option of making no down payment, although you must still make the first month`s payment and official tag and registration fees. Some promotional lease deals require a down payment to get the deal.
More Car, More Often
Since monthly lease payments are lower than with buying, you get more car for your money and drive a new vehicle every two to four years, depending on the term length of your lease.
Fewer Maintenance Headaches
Most people like to lease for a term that coincides with the length of the manufacturer`s warranty coverage so that if something goes wrong with the car, the repairs are always covered.
How About Disadvantages?
The possible disadvantages of car leasing are the following:
Early Termination Cost
If you must terminate your lease before the end of your contract, the cost is usually very high, much higher than might be expected. However, cost can be minimized by making the right termination choices. See the Early Termination Guide in our Lease Kit. Most people end their lease on schedule and do not end early, which avoids all early termination costs.
Little or No Ownership Equity
The trade-off for low monthly lease payments is that you typically do not build ownership or trade-in value in your leased vehicle. However, it is fairly common that the market value of a vehicle at lease-end is higher than the purchase option price specified in the lease contract — which means you may have some equity trade value. It`s not unusual to end up with a few thousand dollars of unexpected equity.
Excessive Mileage Charges
If you exceed the mileage allowance in your lease contract, you will be charged for the extra miles at a specified per-mile rate, usually a reasonable $0.20 per mile. A large mileage excess could result in a hefty charge, even at a reasonable per-mile rate. You can reduce your exposure if you "buy" the extra miles you expect to drive at the time of lease signing. You avoid the higher end-of-lease charge this way. If you choose this option, you will be refunded for any unused miles.
Although leasing offers attractive benefits to automotive consumers, those benefits should be weighed against any potential disadvantages. There are pros and cons to be examined before making a decision.