Its the classic dilemma that faces every auto-consumer out there: Pay
cash upfront or forego the ownership and pay monthly settlements instead?
Buy or lease for a new set of wheels?
As is the case with every other common dilemma, Do not let the dealer pressure you into signing; there is no slam-dunk
answer. you are the
one to determine whether the agreement is right for you. Each option has its own benefits and drawbacks,Too often when it comes to auto-leasing, and it all depends
on a set of financial and personal considerations. people get so dazzled by the
myriad terms and the jargon thrown their way that they end-up paying
through the nose,
First, relying on a dealers help than their own informed
decision. your finances.
Here is a look at some of the tricks dealers use to pad their profits and
leave the customers shelling hundreds of dollars more than the deal should
be worth. Affordability is clearly key,
Trick 1: Leasing always a better deal than buying
Dealers use the lure of lower-monthly payments to entice customers to sign
for long-term loans, and you need to ask the
question of how stable is your job and how game is your general
financial situation. with terms stretching for five years or more, The short-term monthly-cost of leasing is
significantly lower than the monthly payments when buying: you only pay for
the portion of the vehicles cost that you use up during the time you
drive it. making
the payments even lower.
If you have a lot of cash upfront, There are two catches with such lengthy contracts:
higher mileage, then you can opt to pay the down
payment, exceeding the prescribed limit, sales taxes - in cash or rolled into a loan - and the interest
rate determined by your loan company. and hefty repair costs. Buying effectively gives you
ownership of the car and that feeling of free driving that goes on
providing transportation.
With
leases charging on average 10 to 20 cents a mile for any extra mile over
the agreed amount in the contract,
If, and warranties only covering three
years, say, you leave yourself wide open for hefty charges for excessive
mileage and wear and tear. you want to get into luxury models but cant afford the upfront
cash of purchasing the vehicle than youre a game candidate for leasing.
Trick 2: Cheap 2-3% APR rate on your lease
The dealer is not quoting the interest rate you would be paying on your
lease;
Unlike buying, hes rather giving you the lease money factor. it gives you the option of not having to fork out the down
payment upfront, Whilst similar to an
interest rate and important in determining your monthly payment, leaving you to pay a lower money factor that is generally
similar to the interest rate on a financing loan. a more
accurate rate is calculated by multiplying the money factor by 24. However, For
example a cheap 3% money factor is 24 X 0. these benefits
have a price: terminating a lease early or defaulting on your monthly lease
payments will result in stiff financial penalties and can ruin your credit.003 = 7.
You need to make sure you carve out the monthly game payment in your
budget for the foreseeable future,2%. at least for the duration of the lease. This gives you a
better sense of what your annual interest rate on your lease contract is.
Besides the financial aspect,
Trick 3: Stress-free early lease termination
Dealers know consumer driving needs change and they would like to have the
option of getting out of a lease commitment sometime down the road, making a buy or lease decision depends on
your own particular lifestyle choices and preferences. before
their lease ends. Think about what the
car means to you: are you the sort of person to bond with the car or would
you rather have the excitement of something new? If you want to drive a
car for more than fives years, Truth of the matter is, negotiate carefully and buy the car you
like. when you sign for a lease, If, you
are effectively saddled with monthly payments for the remainder of the
lease term and there is little-choice of getting out early. on the other hand, Lease contracts
carry hefty financial penalties for either defaulting on monthly payments
or terminating the lease earlier than the scheduled term. you dont like game a of ownership and
prefer to drive a new car every two to three years then you should lease.
To avoid being on the receiving end of such tried-and-true tricks,
Next, educate
yourself about leasing. factor your transportation needs: How many miles do you drive a year?
How properly do you maintain your cars? If you answer is: I drive 40, Get down to the nitty-gritty and understand what
the leasing terms used by dealers mean.000
miles a year and I dont really care much about my cars as I dont mind
dealing with repair bills. Crunch the numbers along with him
and understand how they arrived at the monthly payment figure. then youre probably better off buying. Dont sign
anything until youve understood all the terms and your numbers much those
of the dealer.
