Lease Cars
Lease Cars began as an option for businesses and buyers of luxury vehicles, however, lease cars have now become a popular choice with consumers in general. The reason is quite simple… it can cost less per month to lease than to purchase with a car loan. New car sticker prices now average $35,000, according to price tracker Edmunds.com. Lease Cars offer lower monthly payments than buying, and leasing allows you to walk away at the end of the term without the hassles of selling, trading or dealing with the smooth talk, arm-twisting and sales tricks of dealers. In fact, car leases afford considerable protections under the Federal Consumer Leasing Act.
Many people have discovered the advantages of lease cars. In fact, industry experts predict that within 10 years, 50% of consumers will lease a vehicle. Today, one in three new vehicles is leased. When it comes to luxury cars, nearly 60% are leased, according to research done by J.D. Power and Associates.
Lease payments typically are lower than purchase payments because they’re based on the purchase price minus the vehicle’s residual value — that is, its expected resale value at the end of the lease term. In theory, customers pay only for the portion of the vehicle’s value they use. The key to making money on lease cars is estimating that residual value.
If you don’t have money for a down payment or if you trade your car every two or three years, you may be a good candidate for a car lease. The Internet has made it easier than ever to find out the dealer’s cost for each vehicle and its options. That’s the first step to getting the best possible lease deal.
Given two leases for the same car with identical down payments, mileage allowances, and other terms, here’s how to tell which one may be best for you. If you intend to keep the lease for the full term and then turn the car in, the best deal is the one with the lowest monthly payments. If you intend to buy the car at the end of the car lease, add up all the monthly payments plus the end-of-lease purchase price. The best deal is the car with the lowest total cost.
Estimate how many miles you’re likely to drive. Car leases typically cover the first 12,000 to 15,000 miles per year. You’ll pay an extra 10 to 25 cents for every additional mile driven, when the lease is up. If you know you’ll drive more than the basic amount, it’s cheaper to pay for the excess miles in advance.
You’ll pay a significant price for returning the car ahead of time. The disclosure statement you get from the dealer will tell you how the cost of breaking the lease is figured.
Lease trades are increasingly popular with drivers who are looking to get out of their current cars and into new ones. When the lease holder can no longer afford the payment, or simply wants a cheaper alternative, or a shorter term than a car loan or even a full-length conventional lease would require, a lease trade could be the answer.
Lease trading can occur between any two parties who find each other through a variety of ways, such as an advertisement or on the website Craigslist. A lease trading service is a common method used by current and new lease holders to transfer or acquire a car lease. LeaseTrader.com and Swapalease.com are two of the most popular lease-trading services.
For a lease holder who has lost his job or is under some other financial hardship, finding someone to take over a lease can help him get out of a tough financial situation without damaging his credit. Once the lease has been assumed by someone else, many car lease holders often find another cheaper lease to assume. Searches for GM leases have remained steady. Corvettes and Hummers are in highest demand, and Chrysler products have a waiting list.
Assuming a car lease is also a popular option with people who need a car for a short term, because lease assumptions can be as short as five months and allow the new lease holders to obtain a lower payment than a loan with no money down.
Anyone with good credit can assume a lease. And, current leasers can trade or sell their leases as long as the leasing company allows it (and most do). Escaping a car lease or assuming a new one involves some cost. There are transfer fees that range from $50 to $500, depending on the leasing company, and the lease trading services will also charge a fee for setting up the match.
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