Consumer Car Buying Advice Blog

There are a number of things to look at when leasing a car. Here at Auto Credit Express, we want you to be aware of the differences between buying and leasing.

Leasing versus buying
With the price of new cars increasing yearly, more customers every day are facing the decision of whether to lease or buy their new vehicle. In addition to making a decision about the make and model, you also need to decide which financing option meets your needs. When you buy a car, you hold the title to it and, once the loan is paid off, you own it. When you lease, you are essentially renting the vehicle for a fixed period of time. While the monthly payments may be lower, you will not own the vehicle at the end of the lease.
Many dealers and other lessor offer vehicle leases but before you make the plunge based on a great monthly payment, you need to get the details and then make your decision.
What the Federal Trade Commission has to say
If you’re thinking of leasing, the FTC offers these shopping tips:
1. Shop as if you’re buying a car. Negotiate all the lease terms, including the price of the vehicle. Lowering the lease price will help reduce your monthly payments. Get all the terms in writing.
2. Learn the language of leasing:
• In a closed-end lease, you return the car at the end of the lease and “walk away,” but you’re still usually responsible for certain end-of-lease charges, such as excess mileage, wear and tear, and disposition.
• In an open-end lease, you pay the difference between the value stated in your contract and the lessor’s appraised value at the end of the lease.

• Lease inception fees are payments you must make when the lease starts, and may include a down payment, security deposit, acquisition fee, first month’s payment, taxes and title fees. Ask for a list of all charges due at lease inception. You may be able to negotiate some or all of the terms.

• The capitalized cost is the price of the car for leasing purposes plus taxes and extra charges like service contracts and registration fees.

• The capitalized cost reduction is similar to a down payment. If you’re trading in a car, make sure the dealer applies the trade-in value to the price your lease is based on. The trade-in credit may reduce your down payment or monthly payments.
3. Ask whether extra charges will be assessed for excessive mileage, wear and tear, disposition and early termination, and find out the amount of these charges. Most leases allow you to drive 12,000 to 15,000 a year; if you put on more miles, expect a charge of 10 to 25 cents for each additional mile. You may think the ding in the door or coffee stains on the upholstery are normal wear and tear; to the lessor, it may be significant damage. Check out penalties for an early return; expect to pay a substantial charge if you give the car up before the end of your lease.
4. Make sure the manufacturer’s warranty covers the entire lease term and the number of miles you’re likely to drive.
5. Consider “gap insurance” to cover the difference – sometimes thousands of dollars – between what you owe on the lease and what the car is worth if it’s stolen or totaled in an accident.
6. Before you sign the deal, take a copy of the contract home and review it carefully away from any dealer pressure. Be alert for any charges that were not disclosed at the dealership, like conveyance, disposition, and preparation fees.
7. Federal law requires lessors to provide lease cost information before you sign the lease. Take a copy of the Federal Consumer Leasing Act Disclosures form
to the dealer and ask them to complete it. Some dealers may be willing to provide the information during your shopping process. If the dealer declines, consider shopping elsewhere.
At Auto Credit Express, we want you to know what you’re getting into

Here at Auto Credit Express, the informed consumer is our best customer. For more information about leasing and financing as well as bad credit car loans, visit our web site at www.autocreditexpress.com. There you will find informative calculators as well as a resource page to help you in your buying and financing decisions. Once you’ve made up your mind, you can use our secure loan application to apply for a loan from the comfort and security of your own home.

This entry was posted and is filed under Credit Repair, New Cars. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.