Have you been looking at new cars lately? If you have I am sure that you have seen some very attractive car leasing advertisements and specials. Many of the auto makers regularly offer and advertise some very low car leasing payments. These kind of specials that are being offered are having some potential buyers asking themselves, is car leasing right for me.
Most people are not clear on car leasing and ask whether it is good or bad. That is a good question, but the answer depends on you and your situation. If you are the type of person that gets a new car every couple of years and trades in your old car, then car leasing might be the best choice for you. Keep in mind that car leasing numbers can be negotiated the same way that you do when you are buying a car. The lingo and process is the same as car buying.
Some people are very much against leasing because they say that you don’t own the car at the end of the lease. Now if you keep your cars for a few years after the finance period then car leasing would not be a good choice for you. When you do the math for a car lease that has been negotiated and fair to the lessor and then compare the money spent over the life of a typical car loan, and any repairs than may be needed the savings from the car leasing might be enough to justify car leasing. Some people enjoy car leasing because they never worry about putting money out for surprise repairs because they are covered under warranty and they are always driving a fairly new car.
With car leasing it is wise to keep the lease term no longer than the comprehensive warranty time frame and mileage. When you keep the lease term and miles at the same time frame or shorter, you will never have to worry about buying extended warranties or paying for any repairs other than standard maintenance.
In essence when you are leasing a car you are financing the portion of the cars life that you are using, plus the depreciation. As an example: let’s say you are leasing a $20,000 car for 36 months. The car manufacturer or lease company says that the $20,000 car will be worth $ 8,000 at the end of the 36 months. Therefore you are financing $12000 over 36 months plus interest charges and taxes based on your state.
Something to keep in mind when car leasing is that some cars depreciate faster than others. The cars that have the best resale values usually have the best lease rates and lowest payments. Also remember that leasing numbers are based on your credit score. Car leasing payments are based on “money factor” rather than interest rate. Your credit score will determined the money factor used to calculate your payment.
A word of warning: Do your homework on a new car that you may want to lease before you get to the dealer. Because of the way a lease is contracted there may obligations that you are responsible for, so read all paperwork thoroughly before signing anything. Leases can, and often do contain hidden charges and penalties. The amount of time you spend researching and doing homework can reward you in savings of thousands of dollars.