Do refer to the Five Things you should know before buying a car as well
since there are some applicable words of wisdom there for you.
The following is specifically related to leasing.
Leasing is simply this: You are looking to take the uncertainty
and risk out of the future devaluation of the car and putting it on the
dealer. In other words, if it’s worth less than the agreed upon
“residual” at the end of the lease, not your problem, he’s still
obligated to take the car back and you walk away. If it’s worth
more, he still has to buy the car at the pre-arranged price.
Thing No. 1 Know these three things.
• The “cap cost.” What you pay for the
car. Sometimes referred to as “capitalized value.” Don’t
let them tell you that the cap cost and the MSRP are the same
thing. They are not. The cap cost should be lower because
it should be discounted.
• The “residual value.” What the dealer will
pay you for the car when you return it. You want this as high as
possible because you have no intention of buying the car. If you
did, you wouldn’t be leasing.
• The “money factor.” The interest rate.
If the dealer won’t tell you all three numbers, walk away.
Thing No. 2 Shop leases.
Check out lending companies
lease costs @ leasewizards.com Of course you will pull these out of
your hat when the dealer offers you a lease deal. It will cost
you a nominal fee (about $12) to get these costs but it is well worth
it. Make sure you see who the lenders are when you get
quotes. Check in with a variety of dealers in your area on lease
quotes at edmunds.com.
Thing No. 3 It is usually more financially prudent to dump the
car at the end of the lease.
This is due to the notorious and
precipitous devaluation of cars. . If, by some act of God, the
car is worth more in the market than the residual, you can really get
fancy and buy the car at that price and resell it privately for
more. Check value @ www.kbb.com . Before you do turn it in, find
out what they plan to hit you up for on extra wear and tear charges
(dings etc.) and mismatched tires. It’ll be cheaper to get it
fixed yourself and get matching tires than to pay the penalty
fees. There’s also a fee built into the contract for processing
the purchase.
Thing No. 4 If you drive more than 15,000 miles per year or
plan to keep the car a long time, don’t lease.
Some leases are
10K miles per year, some are 12K but none are over 15K and you’ll get
hammered on mileage fees if you drive more. Most of the
advertised lease deals only include 8,000 or 10,000 miles per
year. If your going to go over that and you agree to pay $0.20
per mile over, you’re talking about a $2,400 fee after three years.
Thing No. 5 Don’t lease for longer than the
warranty.
The last thing you want is to be responsible for
repair costs on a car you don’t even own.
Thing No. 6 Lease us not into temptation.
Decide what
car you want before you start exploring leases. Lease the same car that
you planned to (or were considering buying) for 40 percent less per
month and resist the temptation to lease a nicer car for the same
monthly cost.
Thing No. 7 Get the rebate.
Just because you’re leasing
does not mean you’re not entitled to it but they like to conveniently
forget. The rebate should come right off the cap cost.
Thing No. 8 It’s a myth that you can’t break a lease.
But, it is usually a rough deal. If you’re in the first 2 years
of the lease, you’re probably too far upside down. However, let’s
say for example, that you have a different job and it’s requiring you
to drive much further than you had intended when you leased the car,
not to mention gas prices and everything else; it is possible (albeit
mildly) that you might actually be cutting your losses by terminating
the lease. You never know, check the current value of the car and
all the potential related costs of keeping it or terminating it
including the possibility of doing a lease swap,
http://www.leasetrade.com or http://www.swaplease.com.
Thing No. 9 You do want the “gap insurance.”
If the car is
stolen or totaled in a fiery crash, your regular insurance policy will
only cover the current value of the car not what you owe on it (which
will be more.) Gap insurance covers the difference. We would
think that you’d know better than to buy this from the dealer by now,
but we’ll tell ya’ anyway. Buy it online @ gapinsurancequotes.com
Now here’s what most people won’t tell you when they regale you with
their knowledge of car shopping: There are more ways to get screwed on
a car lease than a Las Vegas brothel. Luxury carmakers in
particular hide their deepest discounts in leases which means you can
get a great deal if you really know what you’re doing. But more
often than not, navigating these deals is like looking for a terrorist
in a cave somewhere on the Pakistan and Afghanistan border.
Forget about the fact that all the “sophisticated” people seem to
always lease. If you have a deep, haunting feeling that you don’t
know what the hell you’re talking about with all these different
factors, you’re probably going to get taken. Badly. If the
next 3 years of your life are uncertain, not a good indicator that
you’re a great candidate for leasing. If you sense that you don’t have
the stomach to weather a very dicey negotiation process, you’re
probably not cut out for it.