So You Think You Want To Lease?
lease.
- Want to customize your car with modifications or paint.
- Feel strongly about owning your car, paying off your loan and driving it forever.
A great summary of the advantages and disadvantages of leasing is provided from Car Buying Tips
ADVANTAGES OF LEASING
Lower Monthly Payments: You only pay for depreciation during the term, your monthly payments are 30%-60% lower than a purchase loan.
Great way to establish credit: If you are a first time buyer or have bad credit, sometimes leasing is the only way a dealer will finance you.
More Car, More Often: Since monthly payments are lower, you get more car for your money and drive a new car every two to three years.
Fewer Maintenance Headaches: If your lease term coincides with the manufacturer's warranty, major repairs are always covered.
Lower Up-Front Cash Outlay: Supposedly. Leases should require little or no down payment, But many dealers require $2000 -$7000 down.
Just walk away! At the end of a closed end lease, there's no hassle trying to get rid of a used car. You just turn in the car, pay an end of lease disposition fee, and walk away.
DISADVANTAGES OF LEASING
The selling price is usually MSRP: Many dealers hide this value from you, diverting you to low monthly payments.
Confusing finance charges: Some dealers try to confuse you and lie about the money factor and often they won't even tell you the money factor!
Some dealers refuse itemize your trade-in: Dealers are not required by law to itemize your trade-in, and this opens the gate for people to get ripped off by trading in their car, then not getting credited on the new lease for the trade-in. When buyers insist that dealer itemize their trade-in, the dealer refuses.
It's a taxing issue! Most states tax your monthly payment. But some states like Illinois and Texas tax the full amount of the car even though you are only using up 50% of the value then returning it. Even worse, buy the car at the end of the lease, you again pay sales tax on that residual amount! Don't lease if you live in Illinois or Texas.
High insurance costs: Lessors require you have minimum insurance policies of $300,000.
If you lease the car you may not get the rebate. This increases your cost by $500-$1500, or $13-$42 monthly, so make sure you get the rebate! Some dealers try to get out of it.
Misleading dealer lease ads. See that
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