Check incentives: be on the look-out for factory ?subsidized lease deals. Car manufacturers realise that consumers who lease vehicles from them are more likely to be repeat customers than those who simply purchase vehicles. Through their leasing companies, they adjust the residual value and offer low financing charge. Other auto-manufacturers are also starting to give incentives on leasing, called leasing subventions. They offer these subsidies to put slow-selling models on the street, saving you even more money.
Set up a competitive: bidding environment to get the lowest price. If you already have an idea in mind of the make, model and trim level of your desired car, attempt to calculate your own lease payment before you go shopping to avoid paying through the roof. Check online comparison tools or use a lease calculator to check your lease payment based on purchase price. This gives you greater negotiation leverage as you solicit quotes from various leasing companies.
Make sure you know all the fees involved at the beginning of your lease: you may have to pay fees for licenses, registration and title. Other fees include acquisition fees, freight fees and local or state taxes. At lease-end, you may have to pay a disposition fee and charges for extra mileage and any excess wear. Be aware that some of these fees ? like acquisition and disposition fees ? are negotiable. Know your mileage needs: almost all leases limit the number of miles per year by imposing typically 10 to 20 cents per excess mile over 15,000 miles a year. If you are the kind of high-commuter who puts 40,000 miles a year on his car, then you might end up running thousands of dollars in hefty penalties at the end of your lease. Be smart and negotiate a higher-mileage limit or pad you excess miles at the beginning of your lease to avoid robber tax rates for excess miles. Almost all leases limit the number of miles per year by imposing fees typically 10 to 20 cents per mile over 15,000 miles per year. If you are the kind of high-commuter who puts a lot miles on his car, then these costs can add up quickly. Negotiate
Include GAP coverage: make sure your lease includes GAP coverage. This covers you in the event of the vehicle getting wrecked, stolen or totalled. Without GAP insurance, you leave yourself wide open to thousands of dollars in leased obligations. Check if the GAP coverage is included so you don't pay it twice.
You've just brought your new car from the salesroom. It's great. It's shiny, it simply oozes class and most importantly it has that new car smell. But as you drive off the forecourt, you've just thrown away $5,598.61 of your hard earned money. Annoying? Yes!
New cars are great, they are cheaper to run, they break down less, they look good and are very important when you're meeting that new client or even if you just want to show off to your friends and family. They are however a substantial purchase that loses you money from the beginning.
Although it can vary between models, losing out to depreciation is inescapable if you buy new and starts from the moment your 'new car' turns into a 'used car' as you drive off the sales forecourt. Typically a new car loses 25% of its value even as soon as it is driven home from the salesroom, so on an average car purchase*, the buyer instantly loses $5,598.61. The car will continue to lose value at a frightening pace, until three years in, when the value begins to start dropping at around 6% per year. On average over the initial three years after purchase, a new car will lose around 50% of its value although some cars can lose a whopping 75%.
What can I do? It boils down to three options: buy a used car: lease a new car: or walk!
If a new car is what you really want, leasing is becoming the chosen option for many people who are unwilling to lose money to depreciation.
Car leasing companies charge you a fixed monthly price based upon what they think the car you borrow will be worth at the end of your contract. Their customers only pay for the depreciation on a car. Over the lease period this can allow you to drive a new car without losing a significant amount of money through depreciation.
The maths
A new car
(For a 'typical car*' the Ford Focus has been chosen as a good mid-range option at $24,265.16, 5.9% APR is Ford's typical rate [www.ford.co.uk])
Purchase price = $24,265.16 Loan cost + purchase price = $25,696.80 (5.9% APR over 36 months) 50% depreciation over 3 years = $12132.58 Resell value = $12132.58 Total cost over 3 years = $13,564.22
Leasing
(Pricing from Flexxilease.co.uk)
First month payment: $1,304.67 Monthly payment x 36 (New car every 12 months): $416.66 x36 = $14,999.76
Total cost: $16,304.43
Which is better: leasing or buying?
Like everything, it depends on your circumstances and what you want from a car. Over the first three years of ownership leasing can save you •£5309.66. Over the longer term if you keep your car for more than five years it is cheaper to buy, but you have to take into account that you will be driving a five year old car - with a lease contract you can get a new car every 12 months.
Advantages of buying a new car vs. leasing
Leasing •?Significant savings in the first 0-4 years
•?Frequently replaced and updated car
•?Few or no repair costs
•?Breakdown cover is normally included
•?No money tied up in a loss making asset
Buying new
•?Low repair costs initially
•?Good if you are going to have the same car for over 5 years
•?Can choose a car to your exact specification
•?Savings can be made on the cost if you have a lump sum of money
Both Matthew Meyer & David Stadleman are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Matthew Meyer has sinced written about articles on various topics from Blogging, SEO Articles and Advertising Guide. John Ugoshowa. For more information about Auto Leasing see the Auto Leasing section of The Free Ad Forum at: