Getting a car lease means you are using the vehicle for a predetermined amount of time for a specific price. After the specified time, you can either return the car to the leasing company or purchase the car. That makes a car lease very different from an auto loan. There are different car leasing offers available in the market today. You should be smart in choosing the right one to get the most value for your money. Here are some options and guidelines to consider before choosing a car leasing offer.
Capital cost. The capital cost is the purchase price that you will pay the dealer of the car if you were buying it instead of leasing it. Remember that the higher the capital cost, the more you will pay for the lease. Research the cost of cars before visiting an auto dealer. You should research the same costs that an auto buyer would know. These costs are the sticker price or the manufacturer's suggested retail price, the dealer invoice price, the price of the new car in a reference guide for car prices such as in the Kelley Blue Book, the manufacturer's rebate or dealer's incentives, as well as the price of any options or add-ons that can be included with the car upon purchase. Try to negotiate a price that is an average of the suggested retail price and the dealer invoice price. Do not include rebates, incentives, or any mark-ups on options for the car when negotiating for the price of the car. Ideally, you should pay what is suggested in the reference guide for the car. You can aim for less by wisely negotiating with the dealer.
Capital reduction. Capital reduction is any deduction of the capital due to a trade-in or a cash down payment. This deal may run contrary to some common reasons for leasing a car, such as avoiding making a huge down payment. Go for a capital reduction or a trade-in to reduce the capital cost if your dealer offers you a good, affordable price. Doing this will reduce monthly payments, making it easier for you in the long run. Refer to the Kelley Blue Book in comparing the price offered to you by the dealer with the suggested price for the car's make and model.
Residual value. The residual value is the net worth of the car once the predetermined time for the lease ends when you turn over the car. It is expressed as a percentage of the suggested retail price. The higher the residual value of the car, the lower the total cost for the car lease as well as the monthly payments. This is because the lease payments or monthly payments will cover the depreciation cost of the car, which is the capital cost minus the residual value. The car lenders determine the residual value of the car. Look for the highest residual value available.
The money factor. This factor is the decimal figure that determines your monthly lease payment. This is a separate figure from the interest rate of the lease. Your monthly payment is low if the money factor is low as well, thus lowering the total cost for the car lease.
Term of lease. This is the period for the lease. A long term means slightly lower monthly payments. Try to get a long term, but avoid going longer than the manufacturer's warranty to avoid major repair bills.
Annual percentage rate. This is the annual interest rate of the lease. Try to look for the lowest annual percentage rate when choosing a car lease.
Delicious
Digg
Google
Yahoo
