Car Leasing Myths and Facts On Car Leasing

Car Leasing – What is leasing?

Leasing is nothing other than paying monthly for the use of an automobile. Just like leasing an apartment is paying to stay in an apartment monthly. A myth on car leasing is that you own the vehicle when you have it.

With a lease you are using the automobile but do not own it. In other words, just like an apartment you have to maintain the condition of the car in the same way you do the apartment.

The car leasing company expects you to return it in reasonable condition for the amount of time you have used it. You have to maintain full coverage insurance just the same as you would if you were purchasing the vehicle through financing.

The expectation is that you use the car for the duration of the lease and then return it at the end in the condition described in the lease. This includes the amount of miles on the car that will be discussed at the beginning of the lease.

 

Do I need to purchase extra miles?

Many customers have heard horror stories about car leasing mileage overages. Whether they are true or not is debatable. The truth is you need to know exactly how many miles you drive your car each year (and please be realistic).

If you do this and then fit yourself to the best lease for your needs, then you have nothing to worry about. It is better to over-estimate your usage and purchase miles at the discounted rate while you are leasing the car then to go over and have to pay full price when you turn the vehicle in.

 

Is leasing better than buying?

This question looms in every prospective car owners mind. This question is really subjective. You need to decide what works best for you. If you plan on making a car payment and like to drive new and dependable cars, then leasing may be your opportunity to always have that new car.

Leasing gives you a lower payment per month than buying a car and therefore affords you the opportunity to drive a more luxurious car than you can afford to purchase outright. It is really a person specific question and cannot be answered by anyone but you.

 

Can I negotiate the price of the vehicle?

Absolutely! You most definitely can and should negotiate the price of the car in the leasing process. This of course may not apply if the dealer is offering you a deal advertised by the manufacturer for some kind of promotion.

Otherwise you should negotiate the price just the way you would if you were purchasing the vehicle. This is another myth on car leasing that we are exposing. This will be important at the end of the lease if you find that you love your car and want to purchase it so make them give you the deal you deserve.

 

How Does Used Car Leasing Work?

Leasing a car and renting a car are two bipolar concepts and are entirely alien from each other. Used-car leasing works on a principle that you need to pay out a monthly depreciation factor that eventually is the car’s initial pay amount to the residual amount at the end of the lease. Thus, unlike rentals where you pay a fixed amount every month, leasing depends on the depreciation of the car and the amount divided by the total months of lease.

 

Why is residual income important?

Simple – because residual amount is what determines your monthly lease shell out. Consider two cars that both cost around $20,000 as initial pay out. But, say, within a year or two, one car depreciates to around $15,000 and the other depreciates to around $12,000. The one that depreciates the least is the best buy because you get to pay lesser lease per month. If your car is an already leased car, that is even better. You get to pay only half or three-quarters of the lease amounts.

 

MSRP What is this and how will this help you?

Manufacturer’s Suggested Retail Price or the MSRP is the total cost of the automobile you are willing to lease out. Usually the dealer discounts the sticker price of the vehicle but you must put up a strong bargain. There are many secrets a dealer will not tell you and this includes the actual retail price of the vehicle, which will actually be very less when compared to the MSRP. Hence, you must have the actual price of the vehicle well researched before you go and lease out a car.

 

Cap Cost of your Car

The discounted MSRP, which is mutually decided by you and the dealer, is the Capital Cost or the ‘Cap Cost’ as they sleekly put it. This will usually be very less when compared to the MSRP and rightly so. The Cap Cost is what will be used to calculate your monthly lease after the residual amount is cancelled from it. Hence, conduct a thorough research and bargain well to have the least Cap Cost you can afford to.

 

Residual Value after Depreciation

Residual value or more pertinently the resale value is the final cost of the vehicle after the least period, when the value is depreciated. This value is calculated using online car lease calculators and usually cannot be argued as it depends on various factors. However, the residual value is just an approximate and can increase or decrease when time passes.

Thus, car leasing is a cheap way of owning a nice car for yourself. What are you waiting for? Step out and indulge in used-car leasing with affordable monthly payments and zoom off!

 

How Does Used Car Leasing Work?

Leasing a car and renting a car are two bipolar concepts and are entirely alien from each other. Used-car leasing works on a principle that you need to pay out a monthly depreciation factor that eventually is the car’s initial pay amount to the residual amount at the end of the lease. Thus, unlike rentals where you pay a fixed amount every month, leasing depends on the depreciation of the car and the amount divided by the total months of lease.