So You Think You Want To Lease?

You will still have to negotiate with the salesperson on the price of the car. The capitalized cost, or how much the dealer sells to the lessor, is often MSRP. If you don't know already, you should never, ever pay MSRP for a new car and leasing is no different.

At the end of the lease you have four options. You may buy the car, sell it privately, trade it in, or turn it in and walk away.

1) Buying the car. If you choose to buy the car, you may do so for the residual value or 'lease end value.' You are told this amount at the beginning of the lease.

2) Selling the car privately. You may sell the car privately the same way you would if you had purchased it initially. You are simply responsible to the leasing company for the balance still owed (lease end value). You are entitled to any surplus and responsible for any deficit.

3) Trading it in. You may trade-in just as you would if you purchased it initially. The dealer assigns a value to the car and then applies it to the balance owed (lease end value). Any surplus or deficit will affect the new car.

4) Turning it in. You may turn the car in. You may be responsible for any excess mileage or wear and tear charges, which can really add up. Some leasing companies also charge a 'disposition fee' of a few hundred dollars.

Like most things in life, leasing is not for everyone. In fact, few people really benefit greatly from leasing, but those who do can save big bucks.

A good candidate for leasing is someone who:

- Likes a new car every 3 or 4 years.

- Wants more car than they could otherwise afford.

- Drives less than 12,000 miles per year.

- Maintains their car to the point of needing psychological help.

- Saves or invests every extra penny.

- Has little cash for a down payment. (I don't understand how this fits with the reason above either.)

- Hates the hassle of selling or trading in their car when they get a new one.

You should be wary of leasing if you:

- May want out of your lease at any time for any reason.

- Drive more than 12,000 miles a year.

- Plan to move out of state.

- Mistreat cars.

- Live in Illinois or Texas, because of higher taxes on your lease.

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