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April 10, 2012

Buying, Selling, or Leasing a Vehicle

Auto Leasing

What will a lease cost me?

  • You probably will have to pay a security deposit and lease fee for the first month and possibly the last.

  • You may have to pay an initial "capitalized cost reduction." This is similar to a down payment when you buy a car. By paying a large amount up front, you could, in effect, reduce your monthly payments. But by doing this, you lose one of the advantages of leasing: lower up-front costs.

  • Other expenses may include sales tax, title, and license fee, though the lessor may pay them.

  • A lease may include insurance. If not, you must provide your own.

  • You might have to pay for repairs and maintenance after any warranty period expires, unless the lessor agrees to pay in your contract.

  • At the end of the lease term, you may have to pay an excess mileage cost if you have a closed-end lease. (Under an open-end lease, the final appraised value of the car will reflect any excess mileage.) Excessive wear and tear also may cost you.

>>How does leasing differ from renting?
>>Are there different kinds of leases?
>>What will a lease cost me?
>>May I renew or extend my lease at the end of the term?
>>May I escape my lease early?
>>What is a purchase option?

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