Leasing a vehicle is another option compared to taking out a loan for a car or buying it outright. While there are many advantages to leasing a car, there are disadvantages as well. Still, leasing a car is often more affordable than making payments on a vehicle that you own, and after a couple of of years you will not have to be responsible for making repairs, as your lease will be over.
Leasing a vehicle allows you to make payments that are smaller than those required when you purchase a car. Since you are only leasing, or you may want to think of it as a long-term rental of a vehicle for a period of time, you are only paying for it as much as you use it over the time of your lease. The residual value, the amount that the car is going to be worth at the end of the lease, is also deducted upfront from the sum total of the money that you owe on the car.
Assuming that you will be dealing with a separate leasing company from the dealership itself, the leasing company will actually have ownership of the car. Since you are paying them for the use of a vehicle that belongs legally to them, you must maintain the vehicle according to their policies. This can mean general maintenance, oil changes, insurance and how you use the vehicle. If you exceed a certain limit of miles per year, then you will most likely have to pay a penalty, since you are taking away more of the car's value than was agreed upon at the signing of the lease.
A lease contract is much more strict than a financing contract, which happens when you purchase a car. If you sign a lease, and then decide that you want another car before that lease is expired, then you will either be forced to continue driving a car that you do not want or you will be faced with a steep penalty for breaking the contract. On the other hand, if you finance a car and purchase it, and later decide that you want a different car, all you have to do is trade it in or sell it. If your financial situation changes so that you do not have the cash to continue paying for a car that you have financed, then you can simply sell it in order to pay off the balance of the car.
Generally, a lease will put you in a position where you can only average 12,000 miles per year on the vehicle. This may mean that you need to keep track of your mileage in order to figure out ahead of time whether or not you will be able to come in under your mileage quota. This may limit long road trips, vacations or other driving obligations that you may want to consider over the next three years.
Saturday, June 26, 2010
Leasing Tips
Leasing and Buying a Car Tips:
If you look forward to having no more car payments, buying a car is the better option. At the end of your loan term, you will own your car outright.
If you enjoy having a new car regularly or expect the needs of your family to change in the short term, leasing is a good option.
You might heed the advice of the billionaire J. Paul Getty who revealed one of his secrets for accumulating wealth when he said, "If something appreciates, you buy it. If it depreciates, lease it." A car starts depreciating the moment you drive it off the lot.
Car leasing carries high penalties if you terminate your lease early. If you think your circumstance might change, it's better to buy because then you can sell the car when you need to.
If you look forward to having no more car payments, buying a car is the better option. At the end of your loan term, you will own your car outright.
If you enjoy having a new car regularly or expect the needs of your family to change in the short term, leasing is a good option.
You might heed the advice of the billionaire J. Paul Getty who revealed one of his secrets for accumulating wealth when he said, "If something appreciates, you buy it. If it depreciates, lease it." A car starts depreciating the moment you drive it off the lot.
Car leasing carries high penalties if you terminate your lease early. If you think your circumstance might change, it's better to buy because then you can sell the car when you need to.
Leasing or Buying a Car
Tips when you want to Buy a Car or Lease a Car.
When it comes to get a new or used car, deciding whether leasing or buying is best is a personal decision. When you compare both options, you see that they each have their pros and cons. To decide what you should do when you get your next car, here are some things you should take into consideration.
Decide how long you want to keep the car. When you lease, you do not own the car you just rent it for a specific term and then turn it back in. Buying allows you to keep the car as long as you want.
Evaluate how much you can afford to pay upfront. Buying a car often has more upfront costs including the first month's payment, down payment, a security deposit and other fees. When you lease a car you don't have to pay the first monthly payment until the next month and you may not have to pay a down payment.
Compare how much mileage you typically use per year vs. leasing options. Car leases allow for a predetermined number of miles per year and if you exceed that amount, you will have to pay a fee per mile. If you put a lot of miles on a car, buying is a better option.
Determine how much you can afford to pay monthly. Car leasing usually provides significant savings in this department when you compare it vs. buying. Essentially you only pay for the amount of depreciation on the car for the time that you have it plus financing charges.
Compare the end of term procedures for leasing vs. buying. Leasing allows you to turn in the keys of the car and walk away at the end of the term. To get rid of a car you bought you have to either sell it or trade it in.
Check the maintenance record for the car you are considering. It's often easier to lease cars that require a lot of repairs because most leasing contracts cover these costs. Once the manufacturer's warranty expires on a bought car, you have to either buy an extended warranty or pay the repair costs.
When it comes to get a new or used car, deciding whether leasing or buying is best is a personal decision. When you compare both options, you see that they each have their pros and cons. To decide what you should do when you get your next car, here are some things you should take into consideration.
Decide how long you want to keep the car. When you lease, you do not own the car you just rent it for a specific term and then turn it back in. Buying allows you to keep the car as long as you want.
Evaluate how much you can afford to pay upfront. Buying a car often has more upfront costs including the first month's payment, down payment, a security deposit and other fees. When you lease a car you don't have to pay the first monthly payment until the next month and you may not have to pay a down payment.
Compare how much mileage you typically use per year vs. leasing options. Car leases allow for a predetermined number of miles per year and if you exceed that amount, you will have to pay a fee per mile. If you put a lot of miles on a car, buying is a better option.
Determine how much you can afford to pay monthly. Car leasing usually provides significant savings in this department when you compare it vs. buying. Essentially you only pay for the amount of depreciation on the car for the time that you have it plus financing charges.
Compare the end of term procedures for leasing vs. buying. Leasing allows you to turn in the keys of the car and walk away at the end of the term. To get rid of a car you bought you have to either sell it or trade it in.
Check the maintenance record for the car you are considering. It's often easier to lease cars that require a lot of repairs because most leasing contracts cover these costs. Once the manufacturer's warranty expires on a bought car, you have to either buy an extended warranty or pay the repair costs.
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