Auto Leasing : Is it the Right Choice for You?
In auto leasing there is the right way to do things and of course the wrong way. We have compiled a list of auto leasing questions you should answer and a checklist to complete before you decide to take the leap into the world of leasing.
By reading through this short article you should be able to gain a strong understanding of whether it's for you, and if it is, how to spot and avoid the most common lease scams being committed today.
Will my job and finances have the stability to continue for the next 2-5 years?
Rememeber that trying to get out of a lease agreement early is never really a problem, as long as you are willing to pay the substantial penalities. This could present a problem if you lose your job, are demoted or just have diminished financial strength.
Do I enjoy the feeling of not having car payments or do I prefer the enjoyment of always having a newer vehicle?
Deciding to jump into auto leasing means continual car payments, but you will always have a newer vehicle to drive with less repair costs.
How do I make sure I still get the best price?
for invoice pricing on Honda's products. Also, make sure you use it when you are
the exact same way you would if you were paying cash or financing
Do I have anything substantial to lose from an accident lawsuit?
Not owning a vehicle will protect you from a lawsuit resulting from an accident which exceeds your vehicles insurance coverage, but it will cost you. A lease is almost always more expensive than a finance.
Do I want to drive more car for the same payment?
Remember you can drive a more expensive vehicle for the same monthly payment. Be sure this is not your only reason for leasing
Am I certain of my driving habits for the next 2-5 years?
Extra mileage and excess wear and tear can cost you a small fortune at the end of a lease if you're not careful
Do I understand all of the terminology and potential pitfalls of auto leasing?
You can have a great experience and not be ripped off if you are fully prepared with as much information as possible
AUTO LEASING THE SMART WAY
Be sure to do your own budget and not allow the leasing company to be your financial adviser. Stay firm to what you can afford and to the terms you are comfortable with.
When you are deciding on the length of time to lease a specific vehicle consider your annual mileage
Combine the appropriate term and the payment you can afford to determine the proper vehicle to lease. Don't let the leasing company decide the vehicle thats right for you
Visit the manufacturers web site of the cars you are thinking of. Most will allow you to price out a vehicle within a lease and even include your trade value, downpayment etc.
If you have a trade in and are planning on allowing the leasing company take it be sure to get specific wholesale values.
*Used Car Values*
, use the previous link or these sites www.kbb.com for the United States and www.canadianblackbook.com/prv/auth.cfm?token=AB04DC39ZKL01 for Canada.
Consider retailing your old car instead of trading it in. You could potentially make a few extra thousand dollars plus it doesn't allow the leasing company to use it in any confusing tactics
Visit the dealerships of the vehicles you are thinking about and follow the advice of the link below
Auto Leasing and Buying Advice
After deciding on a vehicle ask for lease quotes including your trade in (if you are trading in) and downpayment including taxes etc.
Be aware that everything can be plus taxes so always ask for "out the door" or "all in" prices.
Be sure to take things slow so they're not able to confuse your end goal, getting a great deal. Also, keep a hardcopy of all transactions and discussions
Be sure to read the agreements carefully before signing anything. There are fifteen basic pieces of information that must be disclosed listed below. Be sure they are accurate
Total amount due at signing (down payment, security, first month's payment, dealer service fees, bank fees inclusive of taxes). The frequency, amounts and due dates of your payments.
The total cost of your payments for the entire lease.
The cost of the license, registration and taxes.
The gross capitalized cost, which is the selling price.
How much they gave you for your vehicle which is the net trade in allowance
The down payment which is the capitalized cost reduction
The adjusted capitalized cost.
Rebates, cash and non cash incentives.
How much the car is worth at the end of the auto leasing contract, also known as the residual value.
A description of the insurance provided or required under their auto leasing agreement.
The terms of the provided warranties
If there are any, what the standards are for determining excess wear and tear
Penalties that can be applied for early termination or for late payments
Optional purchase price at the end of the lease
COMMON AUTO LEASING SCAMS
Even though auto leasing has come a long way from when it was first introduced, many tricks and scams can still be pulled. Here are some of the most common.
Dishonesty about the Early Termination Penalty
When you do the smart thing and ask about extra costs they'll tell you there's a $99 early termination charge. $99 if I run into trouble and need to get out early, wow I thought it was supposed to be expensive . What they haven't told you is the $99 is not the penalty, it's a fee that's charged to do the paperwork. You may still have to pay thousands in excess mileage, excess wear and tear or "mandatory lease adjustments".
Quotes given that magically increase later
You have requested lease quotes from multiple dealers to see who offers the best deal. They all have prices that are very similar except for one. Remember monthly payments, downpayments, etc can all be quoted pre-tax. $199.00 per month with $0 downpayment can quickly become $225.00 with more then $1000.00 due at signing or closing. The downpayment is still $0 but you have to pay destination and prep charges plus tax and your first monthly payment, plus tax at the time you pick the car up.
They increase your early payoff and penalty
If you run into trouble and need out of your lease early. You do what you think is right and call the leasing company to ask what you owe. Very few people outside the industry know the formula they use to calculate your early payoff. So what are they actually charging you? Be sure to read all agreements carefully to be sure this isn't happening to you before you refinance or pay it off . Remember though, many successful lawsuits have been filed and won in connection with this way of doing business.
Not giving you anything for your trade-in or stealing your incentive dollars
Auto leasing forms that don't clearly itemize reductions to the capitalized value can allow them to not add in the trade-in value or other reductions. Always be sure to have them show you exactly where your trade-in or reductions are and that the value is clearly stated and of course correct.
Tricking you into an open ended lease with a high residual value
You are delighted at the fact you just signed an auto leasing agreement for the same car you saw elsewhere for $175.00 more per month. What they haven't told you is you are in an open ended lease, which means you are responsible for the end value of the car. "No problem this car holds its value." This would be true if they hadn't increased the fair end value by a few thousand dollars, all of which you will have to come up with at the end of the auto leasing agreement.