How to Lease a new car?

How to lease a new car? 

Whether you lease a car to get into the latest models or have better purchasing flexibility, getting a good deal is always bound to give you a lift.

Use these guidelines to help you spot one:

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. 

How to get put of a lease before your contract expires

How to get out of a lease before your contract expires

When your lease is up, you can simply turn in the keys and lease another car or buy a new one. But how about getting out before the lease ends? 

Maybe you can’t afford the sky-high payments on that silky Jaguar JX V6 model anymore or you’ve just had a baby and you need a larger and more 

spacious vehicle? Unfortunately getting out of a lease is not as easy as getting in!

A leasing contract is difficult and expensive to terminate early. Simply turning in the keys and walking away from a lease can result in stiff 

penalties. You credit could be ruined and you could even get sued for breach of contract. 

It’s not all doom and gloom though. Actually, there is a number of options available to you.You can sell the car yourself and pay off the bank. This can be cost effective if the market value of the car is close to the buy-out number. Do not hesitate to exercise this option even at a loss if it happens to be lower than the termination fee. Your best option, though, is to transfer your lease for someone who would 

“assume it” and take it off your hands. There is a whole set of potential buyers looking for short-term leases without all the hassle and extra costs. Check with family and friends or use the services of lease-

assumption websites, like swapalease.com, to list your car.Make sure you check the credit worthiness of the new lessee and provide the car in good 

condition. 

How to calculate your lease payment

How to calculate your lease payment

Understanding how to calculate your monthly lease payment makes it easier for you to make an informed decision. Yet, most of us shy away from the “complicated” math on our lease contract, leaving it up to the dealer to do the payment formula. 

Actually, it’s not that difficult! Once you understand all the figures involved in calculating your monthly payments, everything else falls into place.

These key figures are:

MSRP

(short for Manufacturer’s Suggested Retail Price): This is the list price of the vehicle or the window sticker price.

Money Factor: This determines the interest rate on your lease. Insist on your dealer to disclose this rate before entering into a lease.

Lease Term: The number of months the dealer rents the vehicle. 

Residual Value: The value of the vehicle at the end of the lease.

Again, you can get this figure from the dealer. 

Now, let us calculate a sample lease payment based on a vehicle with an MSRP (sticker price) value of $25,000 and a money factor of 0.0034 (this isusually quoted as 3.4%). The scheduled-lease is over 3 years and the estimated residual percentage is 55%.

The first step is to calculate the residual value of the car. You multiply the MSRP by the residual percentage:

$20,000 X .55 = $11,000.

The car will be worth $13,750 at the end of the lease, so you'll be using:

$20,000 – $11,000 = $9,000

This amount of $9,000 will be used over a 36 month lease period giving us a 

monthly payment of:

$9,000 / 36 = $250.

This is the first part of the monthly payment, called the monthly depreciation charge. 

The second part of the monthly payment, called the money factor payment, 

factors the interest charge. It is calculated by adding the MSRP figure to 

the residual value and multiplying this by the money factor:

($20,000 + $11,000) * 0.0034 = $105.4

Finally, we get the approximate monthly payment by adding the two figures 

together:

$250 + $105.4 = $355.4

To recapitulate, the sample formula looks like this:

1- Monthly Depreciation Charge:

MSRP X Depreciation Percentage = Residual Value

MSRP – Residual Value = Depreciation over lease term Depreciation over lease term / lease term (number of months in the lease) = 

monthly depreciation charge

2- Monthly factor money charge

(MSRP + Residual value) X Money factor  = money factor payment

3- Sample Monthly Payment:

depreciation charge + money factor payment = monthly payment

Keep in mind that this is a simplified calculation that does not take into 

account taxes, fees, rebates or any other incentives. The calculation gives 

you a ballpark figure or a rough idea of what your lease payments for the 

vehicle in question should be. 

How to avoid extra costs at the end of your lease

How to avoid extra costs at the end of your lease

$250 to dispose of your vehicle, $1000 for extra miles you put on the clock and $200 to replace the light bulb and the worn tyres—lease agents 

constantly nickel-and-dime consumers when their lease runs out.Here’s a rundown of what can trigger those fees, and some steps to take in self-defense.

Disposition fee: leasing companies charge you if you choose not to buy the vehicle at the end of your lease. This fee is set as compensation for the 

expenses of selling, or otherwise disposing of the vehicle. It typically includes administrative charges; the dealer’s cost to prepare the car for resale and any other penalties. Make sure this fee is stated clearly in thecontract and is agreeable by you before signing on the dotted line. At lease-end, you are left in no position to negotiate as the dealer can apply your refundable security deposit towards this fee. 

Excess mileage charges: Almost all leasing companies will charge a premium for each mile over the agreed upon mileage stated in your contract. This penalty can be as high as 25 cents per mile and can add up quickly. To avoid the risk of running thousands of dollars in excess mileage penalties at the end of your lease, always check the “per mile” charges in your contract and be realistic about your mileage before you sign any contract.

If you think the limit is unrealistic given your commutation needs, then negotiate with the dealer to get a higher mileage or contract for additional miles. 

Excess tear-and-wear charges: Another potential cost at the end of the lease is any incidental damage done to the car during the lease. This is 

deemed any excessive damage done to the normal tear and wear of the vehicle. Notice the use of the terms “deemed”, “excessive” and “normal”. There is no standard formula to define what’s “excessive” and “normal” and it’s up to the leasing company to assess – or deem – the damage and determine what they are going to charge.

This leaves you at the mercy of unscrupulous  leasing agents who set stringent tear-and-wear standards. Make sure you read the description of these standards, understand them and agree to them. If your leased vehicle is damaged prior to the end of the lease, you may find it cheaper to repair the damage yourself than pay the excessive charges of the leasing agent. In the event of a dispute over the charges at the end of your lease, get an independent third party to do a professional appraisal detailing the amount required to repair any damaged parts or the amount by which tear-and-wear reduces the value of the vehicle.  

Go green and save on your lease

Go green and save on your lease

Hybrid vehicles’ popularity has sharply grown from a couple of thousandsin early 2000 to close to 300, 000 by the end of 2005. The trend is rapidly catching with the auto-leasing industry with generous tax creditsand incentives on offer if you go green.

Beginning in 2006, businesses and taxpayers who lease, or purchase, an environmentally-friendly and fuel-efficient vehicle will be eligible to claim federal income tax credits worth thousands of dollars. Individual states also offer generous incentives, including hybrid state tax credits, new High-Occupancy Vehicle (HOV) lanes access and discounted thruway tolls for alternative-fuelled vehicles. 

And that’s not all you can save from going green! You can now save on your parking fees at a number of universities and some auto-insurance companies

are offering insurance discounts for hybrid-vehicle owners nationwide. 

If you want to take advantage of these incentives and contribute to energy 

conservation then visit HybridCenter.org and complete a personal profile 

about your driving needs and habits. You will get in-depth advice on hybrid

models that would make economic sense to you and local, state and federal 

incentives available where you live. 

Fees involved in leasing

Fees involved in leasing

Mention auto-leasing and most people will automatically assume a low-monthly payment. There is actually more than what meets the eye, and a number of fees are involved at various stages of the lease process.

At the beginning of the lease, you have to pay a refundable security deposit, typically equivalent to one monthly payment, to safeguard against

non-payment and any incidental damage done to the car at the end of the lease. You are also required to pay an administrative charge, called 

acquisition fee. Other fees include licenses, registration, title and any state or local taxes. 

During your lease, and you expected to honour your monthly payment obligations. Any failure to do so will result in late-payment charges. You have to pay any traffic tickets, emission and safety inspections and ongoing maintenance costs.  Ending your lease early will result in substantial early termination charges. 

At the end of the lease, expect to pay any excess mileage costs, charged at 10 to 20 p a mile. Any incidental damage done to the car, and deemed to

be above normal, will result in excess tear-and-wear charges. Finally, if you choose not to purchase the vehicle, then you have to pay a disposition fee. 

Dealer Leasing Tricks

Dealer Leasing Tricks

Too often when it comes to auto-leasing, people get so dazzled by the myriad terms and the jargon thrown their way that they end-up paying through the nose, relying on a dealer’s “help” than their own informed decision. 

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.

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, with terms stretching for five years or more, making 

the payments even lower. There are two catches with such lengthy contracts: higher mileage, exceeding the prescribed limit, and hefty repair costs. With leases charging on average 10 to 20 cents a mile for any extra mile over the agreed amount in the contract, and warranties only covering three years, you leave yourself wide open for hefty charges for excessive mileage and wear and tear.   

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; he’s rather giving you the lease money factor. Whilst similar to an 

interest rate and important in determining your monthly payment, a more accurate rate is calculated by multiplying the money factor by 24. For example a “cheap” 3% money factor is 24 X 0.003 = 7.2%. This gives you a better sense of what your annual interest rate on your lease contract is. 

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, before their lease ends. Truth of the matter is, when you sign for a lease, you are effectively saddled with monthly payments for the remainder of the 

lease term and there is little-choice of getting out early. Lease contracts carry hefty financial penalties for either defaulting on monthly payments or terminating the lease earlier than the scheduled term. 

To avoid being on the receiving end of such tried-and-true tricks, educate yourself about leasing. Get down to the nitty-gritty and understand what 

the leasing terms used by dealers mean. Crunch the numbers along with him and understand how they arrived at the monthly payment figure. Don’t sign anything until you’ve understood all the terms and your numbers much those of the dealer. Do not let the dealer pressure you into signing; you are the 

one to determine whether the agreement is right for you.

Buy or Lease

Buy or Lease?

It’s 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, there is no slam-dunk answer. Each option has its own benefits and drawbacks, and it all depends 

on a set of financial and personal considerations.

First, your finances. Affordability is clearly key, and you need to ask thequestion of how stable is your job and how healthy is your general financial situation. The short-term monthly-cost of leasing is 

significantly lower than the monthly payments when buying: you only pay for“the portion” of the vehicle’s cost that you use up during the time you  

drive it. If you have a lot of cash upfront, then you can opt to pay the down payment, sales taxes - in cash or rolled into a loan - and the interest 

rate determined by your loan company.

Buying effectively gives you ownership of the car and that feeling of “free driving” that goes on providing transportation.If, say, you want to get into luxury models but can’t afford the upfront cash of purchasing the vehicle than you’re a good candidate for leasing. Unlike buying, it gives you the option of not having to fork out the down payment upfront, leaving you to pay a lower money factor that is generally similar to the interest rate on a financing loan. However, 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. You need to make sure you carve out the monthly lease payment in your budget for the foreseeable future, at least for the duration of the lease.    

Besides the financial aspect, making a buy or lease decision depends on your own particular lifestyle choices and preferences. 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, negotiate carefully and buy the car you like. If, on the other hand, you don’t like the idea of ownership and prefer to drive a new car every two to three years then you should lease.

 Next, 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 40,000 miles a year and I don’t really care much about my cars as I don’t mind dealing with repair bills”, then you’re probably better off buying. Leasing is based on the assumption of limited-mileage, usually no more than 12,000 to 15,000 miles a year, and wear-and-tear considerations. Unless you can keep within the prescribed mileage limits and keep the car in a good condition at the end of your lease, you might incur hefty end-of-lease costs.  

Buy a car at the end of your lease

Auto Leasing Scams

Car-leasing has been lauded as a more attractive alternative to buying, offering in the process the flexibility to drive a new car for less. The reality, however, is that leasing is an option that is fraught with many pitfalls for the average customer. Leasing regulation does not require as much disclosure as buying a vehicle. This has given rise to many leasing scams that trick the customer into believing they are into a good deal when, in effect, all he is getting is a rough deal on the dealer’s terms. 

Here we look at some of these common scams and how to avoid them

Artificially low interest rates:

Some dealers quote a lower interest rate when in reality it’s much higher. They do this by either purposefully quoting the money factor as the interest rate or calculating the loan without amortizing some closing fees, like the security deposit, into the loan lease. Take the money 

factor for example: this is typically expressed as a four decimal digit, something like 0.004. Some dealers quote this as a 4% interest rate when 

in fact you need to multiply it by 24 to get a rough idea of the interest rate on your loan. In this example, the interest rate is a much higher 9.6% 

than the “quoted” rate of 4%. Make sure you crunch the numbers and understand the formula they use to calculate their interest rate. Look out for any fees not factored into the calculation. If you are not satisfied, do not enter into the lease 

agreement. 

Terminate your lease early for a low penalty

This is an all-time leasing scam. You ask your dealer how much you will payif you want to terminate your lease and he tells you: “You want to get out early? Sure thing, you only pay an early termination fee of $300”.  What heis quoting is only the small administrative penalty of early termination, there is a much stiffer penalty called early termination fee and this runs into thousands of dollars.Do not confuse the early termination administrative penalty with the termination fee. Read the small print carefully and know exactly how much you will get charged should you terminate your lease before its scheduled end.  

Pay for an extended warranty you don’t need

This is another shell game to inflate the dealer’s profit at your expense. The dealer slides an extended-warranty into the deal whilst it’s already 

factored into the monthly payments, or he tricks you into buying a 36-month warranty on a 24-month lease.You do not have to pay extra money for a warranty already built into your payments or for one that goes well beyond your lease term. They might slip an extended warranty in. Don’t be fooled, the warranty is already factored in.

No security deposit

Any dealer who advertises a $0 security deposit is not telling you thewhole story. A security deposit is always factored in the lease under the provision for disposition fees.  

Benifits of leasing

Benifits of Leasing

Despite aggressive low-interest financing, cashback offers and other purchasing incentives offered by leading auto-makers to buyers, leasing numbers keep increasing steadily over the years. Leasing is not only anattractive financial proposition to most auto-consumers, but also a lifestyle and preference choice. 

Benefit Number 1: Keeping up with the latest trends

Leasing is sometimes more of a personal and lifestyle choice than a financial one. Many people are not comfortable with the idea of owning a 

vehicle over a long period of time. They’d rather keep up with the latest trends of the industry and drive the latest models every two to three years. 

Leasing a car gives you the convenience of having the latest technology and safety innovation, such as an electronic stability system,DVD entertainment systems and advanced stereo equipment. If you are willing to forego ownership for the latest set of wheels, than leasing is your best option.

Benefit Number 2: Purchasing Flexibility

Leasing also offers purchasing flexibility: it allows you to defer the purchasing decision while using the car. You don’t have to haggle with your 

mechanic over repair expenses, deal with hefty maintenance bills or worry about a depreciating asset. Provided you can keep the vehicle in good 

condition and stay within the contracted mileage allowance, you’re effectively getting a test drive for the length of your lease. At the end of your lease, you can purchase the vehicle or simply turn in 

the keys and walk away. No questions asked.  

Benefit Number 3: Cash Flow

Leasing offers many short-term benefits. It reduces your initial cash outlay as you do not have to pay the large down payment required for car ownership. You only pay for the depreciation on the car - only the part youwill use during your lease, not the entire vehicle. This results in lower monthly payments and frees even more cash. This cash can be put to use moreintelligently elsewhere than the questionable investment of owning a depreciating asset. If you are self-employed or use your car for your job, 

then you can write off your leasing payment as a business expense. 

Benefit Number 4: Negotiating Leverage

Although it may seem a little unorthodox in this industry, almost everything about leasing is negotiable. If you know all the fees involved, 

you can lower your monthly payments, negotiate the purchase price of the vehicle at the end of the lease and contract additional miles on top of your mileage limit. You can also do some shopping around and compare deals from different auto-insurers to get the cheapest GAP insurance for your lease. 

Auto Leasing Scams

Car-leasing has been lauded as a more attractive alternative to buying, offering in the process the flexibility to drive a new car for less. The reality, however, is that leasing is an option that is fraught with many pitfalls for the average customer. Leasing regulation does not require as much disclosure as buying a vehicle. This has given rise to many leasing scams that trick the customer into believing they are into a good deal when, in effect, all he is getting is a rough deal on the dealer’s terms. 

Here we look at some of these common scams and how to avoid them

Artificially low interest rates:

Some dealers quote a lower interest rate when in reality it’s much higher. They do this by either purposefully quoting the money factor as the interest rate or calculating the loan without amortizing some closing fees, like the security deposit, into the loan lease. Take the money 

factor for example: this is typically expressed as a four decimal digit, something like 0.004. Some dealers quote this as a 4% interest rate when 

in fact you need to multiply it by 24 to get a rough idea of the interest rate on your loan. In this example, the interest rate is a much higher 9.6% 

than the “quoted” rate of 4%. Make sure you crunch the numbers and understand the formula they use to calculate their interest rate. Look out for any fees not factored into the calculation. If you are not satisfied, do not enter into the lease 

agreement. 

Terminate your lease early for a low penalty

This is an all-time leasing scam. You ask your dealer how much you will payif you want to terminate your lease and he tells you: “You want to get out early? Sure thing, you only pay an early termination fee of $300”.  What heis quoting is only the small administrative penalty of early termination, there is a much stiffer penalty called early termination fee and this runs into thousands of dollars.Do not confuse the early termination administrative penalty with the termination fee. Read the small print carefully and know exactly how much you will get charged should you terminate your lease before its scheduled end.  

Pay for an extended warranty you don’t need

This is another shell game to inflate the dealer’s profit at your expense. The dealer slides an extended-warranty into the deal whilst it’s already 

factored into the monthly payments, or he tricks you into buying a 36-month warranty on a 24-month lease.You do not have to pay extra money for a warranty already built into your payments or for one that goes well beyond your lease term. They might slip an extended warranty in. Don’t be fooled, the warranty is already factored in.

No security deposit

Any dealer who advertises a $0 security deposit is not telling you thewhole story. A security deposit is always factored in the lease under the provision for disposition fees.  

Auto Insurance and Leasing

Auto Insurance and Leasing

When leasing a car, it’s easier to stick with the same company for your auto insurance. What you don’t know, however, is that you may end up 

paying too much for your coverage and it’s better to look elsewhere for lower rates. 

When you lease, the vehicle that you will drive belongs to the leasing company. They want to make sure that their investment is covered in the 

event the vehicle gets damaged, totalled or stolen. They typically want to get covered for the difference between what your auto-insurer pays and your outstanding leasing obligations at the time of the accident or damage. This is called GAP, short for Guaranteed Auto Protection, and is usually included in the leasing contract. If your leasing company is called BMW Financial Services, Chrysler Financial or any other finance division of an automaker, then chances areyour GAP insurance will be offered by the same lease company.    

You are under no obligation to accept GAP insurance included as part of your lease agreement. Why pay an insurance premium if you could get the same coverage for a lower price? 

Invest some time shopping by comparing quotes from other insurance companies, including your existing one. Ask for discounts that you already 

qualify for and adjust your coverage accordingly.