Should I Be Leasing My Next New Car ?

By: AutosBargain.com Team

Leasing is a very simple concept. You only pay for the portion
of the vehicle's worth that you are actually going to use, plus
lease charges to the leasing company. Leasing a vehicle means
that a person pays the amount by which a vehicle's value
depreciates during the time they are driving it. Depreciation is
the difference between a vehicle's original value and its value
at lease-end (residual value), and is the primary factor that
determines the cost of leasing.

What attracts
people to leasing? Affordability. With leasing, you can drive a
new vehicle with little down payment. Plus, leasing will enable
you to drive a new car or truck more often and without worrying
about unpredictable resale values. Leasing has become popular
because it offers people a way to drive the vehicles they want
-- often better vehicles than they could buy -- for less money
compared to purchase. Leasing has become increasingly popular
over the years because of two main factors. First, the cost of
new cars has spiraled upwards recently, often escalating prices
out of reach of average buyers. Second, tax law changes in the
late 1980's eliminated interest deductions on automobile loans,
further increasing the cost of ownership. The net effect is that
people have become increasingly eager to find ways to make their
personal vehicles more affordable.

Leasing is
simply a method of paying for the use of a car, truck, SUV, or
van over a specified period of time. Once the consumer and
dealer agree on a price (capitalized cost), and the lease
contract has been signed, the dealer then sells the car to the
leasing company at the agreed upon price. The leasing company
then leases the car to the consumer, based on that price. For
this reason, price becomes the most important factor in what a
person pays in monthly payments.

Before you decide
to lease a vehicle, take a moment to determine if leasing is
right for you, compared to buying. If you agree with any of the
statements below, then you're probably a good candidate for an
auto lease:



* I'm comfortable making regular monthly payments
* I
prefer to drive a car that's always under warranty
* I
don't drive more than 15,000 miles per year
* I don't want
to hassle with trade-ins
* When I trade a car in, I owe
more than it's worth
* My car will be used for business
purposes



The consumer has the option to shop for his/her own
leasing company, bank, or credit union to find better lease
terms compared to the leasing companies offered by the dealer.
Most online leasing programs
can arrange to secure a better lease due to fleet arrangements.
The tradeoff is that dealers make it very convenient to arrange
for both the vehicle and the lease all in a single meeting and
the dealer's specified leasing company can often offer special
lease terms and incentives to help the dealer move vehicles.

Signing a leasing contract means that the consumer
agrees to make regular monthly payments, keep appropriate
insurance, pay any vehicle taxes and licensing fees, and take
good care of the vehicle. Furthermore, the consumer agrees to
keep the car for a specified number of months -- typically 24,
36, or 48 months -- and is expected to hold onto the vehicle
through the end of the lease contract. Keep in mind, it can be
very costly to end a lease early.

One last thing to
remember, because you pay for the use of a vehicle during a
lease, you should put as little money down as possible, up
front. Although putting money down can lower your lease payments
(by reducing your capitalized cost) in most cases it cannot be
regained in the event of early termination due to a loss.

For example, a customer leased a Honda Accord and put
$4,000 down as a cap reduction. Three months later the vehicle
is totaled in an accident. Customer's insurance will pay its
portion of the lease payoff and Gap Insurance will pay the
balance. Customer will walk away with only paying his insurance
deductible but he will not get reimbursed for his initial down
payment of $4,000. It will be lost. The moral of this true story
is to put as little money down as possible, ideally no money
down.

*ref link:
http://autosbargain.com/index.php?option=com_weblinks&catid=116&I
temid=57

About the author:
Everyone tries to negotiate the best new car deal in town, but
we simply don't know what the lowest price is.



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