| |
| |
|
Leases & Leasing Information |
|
|
|
Smart Car Leasing for Beginners
Car leasing is extremely popular because it provides an attractive method of driving an automobile that you might not otherwise afford. It allows you to make lower monthly payments than with traditional car purchase loans. About one out of every four vehicles driven by automotive consumers in the United States are leased. But leasing is not for everyone. You should take the time to learn about leasing, and be sure it's right for you before making a decision. What is Leasing While a purchase loan is a method of financing the ownership of a vehicle, leasing is a method of financing the use of a vehicle for a specified time period. As much as it sounds like renting, leasing is different. A lease is a formal contract with a leasing provider that allows you to drive the provider's car and only pay for the portion of the vehicle's value that you use up during the time you're driving it. You agree to pay for insurance, licenses, taxes, repairs, and maintenance. The leasing provider retains ownership and title to the vehicle throughout the lease. At lease-end you can simply return your vehicle to the provider, or you may purchase the vehicle and continue driving it. Benefits of Leasing Leasing offers the following benefits when compared to purchase loans: - Lower monthly payments - More car, more often - Minimum or no down payment - Smaller sales tax bite in most states - No used-car headaches at end Who Provides Leases Contrary to popular belief, car dealers do not lease cars. Banks, credit unions, and financial divisions of major car manufacturers lease cars. Dealers simply act as agents of a leasing provider, such as Ford Motor Credit or GMAC, to arrange the lease on your behalf. Dealers typically work with more than one provider. Once you've picked out the car you want, the dealer sells it to the leasing provider, who leases it you. It's not necessary, nor is it always the best choice, to use the "captive" leasing company chosen for you by the dealer. You can arrange for lease financing yourself with an independent leasing company, bank, or credit union after you've negotiated price with a dealer. Some lease providers even work with dealers to acquire vehicles for you at reduced prices, saving you money and the stress of negotiation. Who Should Lease Leasing makes sense for many automotive consumers, but not for others. Here's how to determine if you are a good leasing candidate: - Are you willing to trade ownership of your vehicle for lower monthly payments? Leasing is a great way to lower your payments or drive a better car for your money, but you must be comfortable with having no ownership of your vehicle, unless you purchase at lease-end. - Can you stick with your lease until the end? Leases require you to commit to driving your vehicle for a specific number of months - typically 24, 36, 48, or 60 months. If you feel your lifestyle, your finances, or simply your taste in cars may change significantly in future months, you may not be a good lease candidate. To end a lease early is usually troublesome and costly. - Do you drive more than 15,000 miles annually? If your answer is yes, you may not be a good candidate because lease contracts are typically written with an annual mileage limit, typically 10,000-15,000 miles. If you drive more that the specified number of miles you will pay a fee for every mile over the limit. - Do you typically keep your vehicles in good condition and change vehicles every few years? If so, you may be right for leasing. Lease providers require you to keep their vehicle maintained and repaired, with no more than normal wear and tear. If you don't, you'll be charged at the end of your lease. - How is your credit rating? If you have a history of paying your bills on time and don't have excessive debt, you are a good lease candidate. Otherwise, you may be required to make a large down payment and pay higher finance charges or, worse, be refused the opportunity to lease. Shopping for a Lease The most important element of a good lease deal is the price of the vehicle. Regardless of whether you buy or lease, you should always get the best possible price first. When leasing, this price becomes the capital cost, or "cap cost." Prior loan balances and fees may be added. Rebates, discounts, down payments, and trade-in credit are subtracted. The lower the capital cost, the lower your monthly payment. This is the only element of a lease deal that a dealer directly controls. The remaining elements of a lease - money factor, residual value, and related fees - are controlled by the lease provider and are not negotiable. Since a lease is simply another form of financing, interest charges apply. These interest charges are known as "money factor." Money factor is expressed as a very small number such as .00375, which is equivalent to 9% annual interest rate. Again, a small money factor results in lower monthly lease payments. Residual value is an estimate of a vehicle's wholesale value at the end of a lease term. The longer the lease, the smaller the residual value. Your lease payment is primarily determined by the difference between cap cost and residual value, which is the amount that the value of the vehicle depreciates during the lease. The higher the residual value, the lower the lease cost. Sales tax may also be included in your monthly payment, depending on the state you live in. You can easily calculate car lease payments, once you know the key factors, using this Lease Calculator by LeaseGuide.com. Leasing Fees There may be certain fees associated with your lease. The fees that lease providers charge vary both in kind and amount. One of the most common is an "acquisition fee", which is an administrative charge for the work in initiating a lease. Another common fee is a disposition fee, usually charged at the end of your lease when you return your vehicle. You may also be charged at the end of your lease for excessive mileage, damages, and unusual wear-and-tear. At the beginning of your lease, you will be asked to pay the first month's payment, a security deposit, a down payment, if any, and applicable miscellaneous fees associated with licensing a vehicle in your state. You will also be asked to show proof of insurance. Driving Your Leased Vehicle Your vehicle must be driven and cared for according to the terms specified in your lease contract. Generally, this means keeping the vehicle in good condition, using it for lawful purposes, maintaining insurance, and allowing it to be driven only by licensed drivers. Al Hearn is founder, owner, and operator of LeaseGuide.com, a source of information and advice for automotive consumers who are interested in car leasing. LeaseGuide.com has provided help to thousands of visitors since 1995. Please visit: http://www.LeaseGuide.com/index2.htm
MORE RESOURCES:
Leases-Leasing - Google News |
|
|
|
RELATED ARTICLES
Ten Ways Start-ups Use Venture Leases And Loans To Generate Millions The rise of venture leasing and lending has created an opportunity for sophisticated entrepreneurs to gain a competitive advantage. Savvy entrepreneurs are using venture leases and loans to generate millions of dollars for shareholders by leveraging existing venture capital. Smart Car Leasing for Beginners Car leasing is extremely popular because it provides an attractive method of driving an automobile that you might not otherwise afford. It allows you to make lower monthly payments than with traditional car purchase loans. Interim Rent: Equipment Leasing's Trap Door Many lessees enter into lease transactions that they believe are competitive based on faulty rate assumptions. Most lease rate calculations don't take interim rent into consideration. Insiders Guide to Snaring the Best Lease Deal Every year, thousands of business owners and financial managers are faced with the task of obtaining attractive financing for equipment their firms want to acquire. Snaring the best leasing arrangement requires only a bit of planning and a smidgeon of finesse. The Lease And Purchase Option If you have an investment property, should you rent it or sell it? The answer to that question is that you should do both. If you have lots of time on your hands and are handy with tools, you can choose to rent out your property. Lease Contracts - The Meaning of Joint and Several When you see the phrase "joint and several" in a legal document or contract it means that that the parties on one side of the agreement are responsible individually and collectively for the terms of the agreement.Example: In the case of two tenants signing a lease agreement, "joint" means they are jointly responsible for the rent. The Leverage of the Lease In today's rapidly changing business environment it makes sense to consider all the options before paying for your business equipment - whether it's a photocopier, computer system, computer hardware or software, telephone system, security equipment, office furniture or anything else. Many business people will give great consideration to the actual purchase, getting quotes from different suppliers and considering different choices. Using Equipment Leasing as a Competitive Weapon Most great generals know how to design winning battle plans. They also know how to use their resources to gain advantages over the enemy. Explore An Effective Revolutionary Approach To Traditional Business Financing For business owners who need working capital now there is a revolutionary, tax-deductible cash flow solution that frees up capital and gives them the money they need to grow. This diversified cash flow solutions is known as "asset leasing. Leases And Tenants - The Spooky Tenant You, Mr. Landlord are pleased to find qualified tenants for your rental house. So You Want to be a Landlord? The residual income from owning rental properties may bring more money into your life than the fast flip in the long term. If nothing else, the stress is reduced because a well-chosen investment will pay for itself until you the market is ready for you to sell. With a Lease, The Devil Is In The Details In the last article we looked at a few of the things you should consider before leasing that first office or storefront for your business. To recap, you should not only consider the old standard "location, location, location," but also consider things like sufficient parking, the number of employees who will be working onsite, and future growth projections. Lease or Buy? That is Always the Question with Car Financing Leasing is a perfectly viable and legitimate way to finance a new car. Although leasing offers attractive benefits, it is somewhat more complex than buying with a loan. Landlord Tips And Tricks Every real estate investor dealing in rental homes has done his own clean-up and fix-up, at least in the early years. Landlords also become very skilled at managing tenants after being burned a few times. Equipment Leasing Blunders That Can Cost Your Firm a Mint Rod McHenry, the financial vice president of a document imaging company, thought he had great cause for celebrating. He had signed an unbelievable $370,000 lease proposal covering computer servers, workstations, software and other networking equipment. Getting Your Venture Lease Approved Each year venture capitalists fund more than 2,500 start-up companies in the U.S. Basic Things You Should Know About A Lease Purchase Contract What exactly is a contract?By definition, a contract is an agreement between two or more parties to do, or to refrain from doing, a particular thing in exchange for something valuable. The parties can be individuals, businesses, organizations and government agencies. Ten Equipment Leasing Tips - Save a Bundle on Your Next Lease According to the Equipment Leasing Association ("ELA"), U.S. Terms to Know Before Leasing A Vehicle - Leasing Jargon Simplified So, you've decided that you want to lease that next vehicle. Can't really blame you. Increase Your Business Growth and Cash Flow Through Equipment Leasing "If it can be manufactured, it can be leased." For the past decade or so, this statement has become more and more true to fact.
|
| home | site map |
| © 2006 |
