CCC054: What You Need to Know About Auto Leasing

Let's explain the dangers of auto leasing!

Jeff Bartlett, deputy automotive editor at Consumer Reports
“If you asked me what is the most expensive way to get a car, the answer would be: You only want to own it during its period of greatest depreciation and then move to another new vehicle.” “Well, that’s what leasing is.”

lease noun \ˈlēs\: a legal agreement that lets someone use a car, house, etc., for a period of time in return for payment

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How is the payment calculated?

Purchase price - how much you pay, you should negotiate just as hard as if you were buying
Cost of money - interest rate
Lease term - number of months of the lease
Residual value - estimated value of what the car will be worth at lease end
Sales tax - You will only pay taxes on the sum of your payments, which is the difference between the purchase price and residual value.

What is the average lease payment?

Avg auto loan in Q4 2013 $471
Avg auto lease in Q4 2013 $420

What are the gotchas with leasing?

Paying too much upfront
Forgetting to buy gap insurance
Underestimating you miles driven
Not maintaining the car
Leasing for too long

What types of auto leases are there?

Closed-end Leases which are mostly consumer leasesOpen-end Leases

Open-end leases are primarily for commercial business leasing. 

How do I know if I’m getting a good lease?

Leasify - App to confirm you are getting the best lease. 99 cents.

Leasify is a car lease advisor in your pocket. Leasify levels the automotive playing field by giving you the information you need to get the best deal on your new car lease.

 X-rays lease quotes to extract hidden fees and areas where you can improve your deal
 Serves as a financial decison-making tool with a sophisticated algorithm that generates a deal score
Displays what the dealer paid, as well as the average price paid, for any car in your zip code

Next week, I'll be talking about how to get out of a lease if you find yourself in one and want out.

God Bless You!

Links:

Auto Leases Entice, but They’re Still Costly: http://nyti.ms/1wfmUju

Merriam-Webster Online: http://www.merriam-webster.com/dictionary/lease

Types of Car Leases – Explained: http://www.leaseguide.com/lease06/

Lease Payment Formula Explained: http://www.leaseguide.com/lease08/

Calculate Your Own Car Lease Payment: http://edmu.in/1x8lzwr

5 dumb car leasing mistakes to avoid: http://bit.ly/1CdUwmq

Experian Automotive report shows auto loans are still first choice in financing, but leasing has become more popular than ever: http://bit.ly/1CtQW8k

Depreciation Infographic: How Fast Does My New Car Lose Value?:  http://edmu.in/WELal0

Leasify App: https://itunes.apple.com/US/app/id912884639

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