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Bad Idea To Lease A Car

 

Nowadays car leasing is a heavily used technique that most car dealers favor. It’s understandable why it’s so attractive to the average citizen. You have to deal with a little cash at the beginning and a low payment program that stretches throughout the 24 or 36 months of leasing. If you’re the kind of person that favors car changing every 2 or 3 years than the leasing systems seems your best bet. Or is it?

 

 

 

Think about it. First of all consider that you owe something, yet you do not own anything. One of the main problems in car leasing is that you cannot claim that the car you’re driving it’s yours despite the fact that you’re paying for it, therefore getting zero equity. Despite the fact that the lease is at all times secured by the very car that you’re using, you have no collateral in case of a required back up. Consider that the dealer holds both ends of the rope: ownership of the car and your leasing contract.

 

You may call this a lease as much as you want, yet if you look on your credit report you will see that it appears as a payment established with a monthly fee, which seems to be peculiarly similar to the usual loan, but worse since in a loan at least you can call the car yours.

 

Another downside to it is the limited future options. Leasing a car will be seen more like a loan compared to a house or apartment leasing. This means that you’re up for the entire lease balance at any given point during its term. Usually leasing companies will let you terminate the lease earlier than scheduled but this usually comes at a high price in penalties and other fees.

 

Bad Idea To Lease A Car

 

If you’ve entered a lease than you better stick with it to the end because there is practically no way out without having to deal with a truck load of fees and penalties that are meant to actually make you keep your end of the bargain until the lease expires. Considering how fast life is changing all around us, it is so smart to enter head first in a leasing contract that offers so little room for change?

 

Another problem with leasing is the multitude of restrictions that are given in subjective parameters which makes it even worse. For example, you’re given a limited number of miles each year. Crossing that boundary may cost you very much since each extra mile can be taxed for up to 15 cents. Normal Wear and Tear is accepted, but what exactly does “normal” mean? If you see a little damage to the upholstery, that might mean normal to you, but almost every time, the dealer is going to perceive “normal” differently. And since the dealers lawyer prepares the lease (you can never bring your own lawyer) there’s nothing you can do about it.

 

When entering a lease, usually people base their mileage estimation on their driving history. Few take into account the fact that the daily pattern may change at a given time and they will be forced to drive from 30 miles per day to 100 miles. What then? If you found yourself in a situation like this, than you better have deep pockets because you’ll be paying a lot of extra miles. Because of this, you can never calculate with precision the total cost of the lease because, there are variables that aren’t controlled by you at all times, therefore you’re forced to take a no so calculated risk anymore.

 

Car Lease Calculator

Leasing is the best mode we can buy a car. It is cheaper and faster than a bank loan and is perfectly designed for car buying. A car lease calculator is a financial tool that helps lease customers to calculate their own monthly payments by themselves in front of the computer before they ask the lease consultant to aid them in filling all the forms.

The car lease calculator is helping you calculate the monthly payments and also helps you calculate the overall lease costs. It is very important that the user of this calculator to know the basic factors of their lease deal for the car they intend to buy. The car lease calculator helps you discover the hidden fees from the back of a lease contract and also check car dealer figures.

Car Lease Calculator

In few simple steps in which you have to fill some fields, the car lease calculator will analyze your fillings and will provide you an instant answer for your calculation.

First step requires to you to fill the manufacturer suggested retail price, without including in the price the dealer fees, taxes and car options like paint sealant or fabric protectant, but you can include in the price the window stickers for your vehicle.

Next step is filling the base capitalized cost. This cost is the price you and the car dealer negotiated. In this price you don’t have to include any other fees or costs because are some other fields that will require for these costs.

Third step is filling the costs added or included to lease, for example bank fee, insurance, warranty or tax for luxury cars. In this field do not include any money that you will pay cash for any fee or tax.

The firth step you purchase for calculating the monthly payment of your lease is filling the values of the payments you made upfront, like down payment or a rebate from the manufacturer. After that the calculator is computing the net capitalized cost of the car. This cost is the cost from where were removed all the money you paid upfront and all other fees and taxes you entered in the previous steps fields.

The sixth step is the filling of the residual value, which can be a value or a percentage, depends on the lease company you use. The seventh step is a little bit delicate because you will have to ask your lease agent. In this step you have to fill the money factor or the interest rate of the leasing company.

Next you have to fill the term of your lease in months that usually are 24, 36 or 48. It is very important that the lease contract to be shorter in time then the warranty given by the car manufacturer.

And the final step is filling the sales tax accordingly to the state, county or city you live in. and by pressing next step you will have everything calculated and established a monthly payment according to the dates you field in along the steps we talked about. You can also print this report and show to the leasing company that you already know everything about your leasing.

Business Car Lease

Many entrepreneurs out there take a business car lease in order to benefit from significant tax breaks. Leasing a car for business purposes is not much different in comparison to leasing one for personal needs.

Before you head out to lease a new car, we advise you to do a little bit of research and don’t make any rash decisions. Have a look on websites like Edmunds.com as well as manufacturer’s websites in order to find out the latest least promotions and car features. Get in touch with the dealership by sending an e-mail asking them about the inventory and a quote for a certain model. Once you have established the car that you want, get as many price quotes as you can from the local dealerships and learn more about their current inventory.

After you have picked out the car that you want to buy, it is time to do some business. The leasing firm might require personal credit guarantees depending upon the size of the business, but make certain that you title the car to the business. Get in touch with your accountant to write off part of the lease payment. A percentage of the business lease can be tax-deductible.

You should write down how much time you spend driving the car as you will need to be able to confirm to the IRS of the percentage of time you spend driving the vehicle for business purposes, and by getting as close as possible to the exact percentage, the more accurate you will be, meaning that you will benefit from a greater tax deduction for the business car lease. Put down in writing all of the time you spend in the vehicle and make a succinct note of what the general purpose of the trip was. Driving to and from work is a business-related trip so you must write it down. We know that this may sound a little bit inconvenient, but if you want to save more money, this is a great way to do it.

For getting a deduction, you will have to calculate the total amount of cash you have paid to the leasing firm over the tax year. Usually, it will be your monthly lease payment divided by 12, although there are some lease agreements in which the monthly payments vary.

To find out how much you can deduct, multiply the percentage (in decimal form) by the total amount of cash you have spent on your yearly car lease payments. The result will be the total amount that you will be able to deduct from the car’s cost. In addition, you also have the possibility to deduct a part of the money that you paid for maintaining the vehicle, along with other miscellaneous expenditures, like the cost of gasoline, insurance, and any other repairs you had to make in the past tax year.

If you have a more expensive car, you may have to deal with the lease inclusion amount. This will limit the amount of money that can be deducted – you can get more info about this through the IRS.

Source: Edmunds.com, IRS

Best Car To Lease

The best car to lease in a certain period isn’t as hard to find as you might have thought. Although choosing a certain car make and model is a personal matter of taste and desire you should know that your choice can make a huge difference when leasing. Common knowledge tells us that the best deals come with those cars that have high lease-end residual value, low lease rate (money factor) and low lease price.

The high lease-end residual value we mentioned above is a significant part of a good lease deal. The residuals are in most cases expressed as a percentage of MSRP. A car that has a 60% residual percentage will usually be better than a vehicle with a 45% residual percentage.

You should know that some car makers and models have higher comparative residuals in comparison to other makes and models. To get a clearer image, most of the cars made by BMW, Mercedes, Honda, Lexus, Porsche and Acura have higher residuals in comparison to models rolled out by Hyundai, Kia, Chrysler, Dodge, Ford and Chevrolet.

The aforementioned money factor is also very important in any car lease deal. It is related to the interest rate and can be converted to APR by multiplying by 2400.

To get a good deal, take into consideration the discounted lease price which plays a major part. The car dealers can contribute to a certain limit to a discounted listing price, but if the company that made the car starts rolling out rebates as well as other incentives, you could save a bundle. If you are able to obtain a price that is close to the dealer invoice price, you got yourself a pretty good deal.

To sum up what we talked about before, the most sought-after offers regarding the best car to lease would be the one in which the automaker offers a “subvented” deal, in which he can provide a combination of high residual value, low money factor and most important, a discounted price tag.

If you have found a car lease that you think is suitable for your needs, make sure that you take a very close look at the fine print and see if you can live with the required conditions, like down payment, annual mileage limits as well as lease terms. Don’t forget that you should have a very good credit score in order to qualify for such a deal. You probably have read many advertisements that said “only available to highly qualified customers”- this is what they were actually talking about.

Without the aid of promotional “subvented” lease deals from automakers, the deal which you plan to make might not be just as good as you had hoped. Because the dealer cannot control the residual values and the lease rates, the only element left for the buyer to negotiate is the lease price. You could very well ask the car dealer if he can offer you alternative lease sources, such as large national banks like Wells Fargo or Chase that might give you more affordable rates. This situation is more probable for customers that plan on leasing high-end luxury cars.

Don’t forget to take your time and shop around at other car dealers, although if you decide to go to the dealers that are selling the same brand cars, you will most likely get the same offers as they use the same financial institutions. However, give it a go; you might be pleasantly surprised by the outcome of your search.

If you live in Canada you are out of lock because the independent leasing firms are much harder to find than in the United States, which means that you will most likely get stuck with the automaker’s finance company. This is why in Canada there are higher costs than in the US.

If you don’t know what it means to lease a car, it means that you will be signing a leasing contract in which you will agree to make all of the monthly payments, keep the appropriate car insurance, pay any taxes and licensing fees as well as take proper care of the car. In the contract you will agree to keep the car for a determined period, usually 24, 36 or 48 months. After the lease expires, you must return the car to the leasing firm with no more than normal wear and tear. If any damages have occurred or if you have driven the car over the contract-specified limits, be prepared to pay extra.

When putting down the contract in writing, you could add the possibility to buy the car when the lease period ends. Another way to go is to trade-in the car for a new one. Otherwise, you will simply have to return the vehicle to its rightful owner and walk away but don’t forget about the equity value in your car that you do not want to simply give away to the financial institution.

In the end, here are the advantages and disadvantages of looking for the best car to lease:

Advantages:

a)      Upgrade to new / different car every few years;

b)      The car will be under warranty during the entire contract in most of the cases;

c)       Depending on the contract specifications, the lease may provide lower monthly payments in comparison to purchasing the car with regular loan terms;

d)      You will be paying lower sales tax due to the reason that you aren’t paying tax on the entire car purchase price.

Disadvantages:

a)      Not all deals are equal which means that in some markets a regular lease may end up being more expensive;

b)      If you decide to terminate the lease earlier, it would cost you a lot of money;

c)       The mileage restrictions can be a huge impediment;

Due to the fact that the car doesn’t belong to person that takes the lease, you will not be allowed to make any modifications to the vehicle.

Best Month To Lease A Car

First of all you need to know that some people say that buying a car makes more financial sense than leasing one. This is indeed true but only if you plan on keeping the car after you have finished with all the payments. Leasing is the perfect method for drivers that want to have a new car as often as possible. In addition, if the car that you have now needs to be replaced, but the one that you want is not available yet, leasing a car can be a solid way for staying on the road while you wait for the one that you want.

First of all you need to know that the manufacturers have a pretty big amount of control over the leasing factors as the best leases are in most cases handled through the car maker’s financing company. In addition, the willingness of the dealer to negotiate plays also a determinant role in the affordability of a new lease.

The best month to lease a car is in December, even November in some cases as the end-of-the-year sales are a result of many factors. The most important one would have to be that the dealers are trying to achieve their year-end volume and sales target – the same situation with the automakers. Due to the reason that both sides want to hit their pre-established targets, both of them will make better deals than they usually do.

You need to have a look at the schedule of the regional auto shows and during those months, the likelihood of getting a better deal is higher. In addition, every manufacturer chooses sometimes to support the lease. By “support” it means that the buyer will get factory-sponsored lease incentives. In such cases, the automakers give below-market lease rates or high residual rates and in some situations, they sometimes they give “dealer cash” which means that the dealer will have more room for negotiations. Usually, car makers do this for two reasons: one, to get rid of a particular model year and two, to win sales volume awards.

Depending on what car you want to get and if you don’t want to wait anymore, February might be the best month to lease a car as there are a couple of very interesting offers from various manufacturers and automotive segments. Here are a couple of relevant examples:

First of all, if you are looking for an SUV, the 2011 Nissan Murano is available for $349 per month for 39 months but you will have to pay $2,499 when signing the deal. The offer is available for the Murano S AWD with Splash Guards and Mats. It expires at the end of this month.

The new Jetta is out and you can get a pretty good lease deal: $179 per month for 36 months and with $1,999 due at signing. The offer is available for all the models, except the TDI ones and it expires at the end of February.

The 2011 Cadillac CTS can be yours for $349 per month for 39 months with $1,949 due at signing. The offer is available until the end of this month and only for the coupe models.

Another interesting offer for an SUV would be for the 2011 Buick Enclave. Here is the lease deal: $443 per month for 39 months and you don’t have to pay anything when signing the deal. The offer is applicable for the FWD CX models. The deal is available until the end of this month.

If you are looking for a reliable Japanese car, the 2011 Mazda3 can be yours if you are willing to pay $199 per month for 42 months. You don’t have to pay anything when you sign the contract, but be aware of the fact that the deal is available for the i Sport models that are fitted with an automatic transmission. The deal is available until the end of this month.

One last deal would have to be for the 2011 Infiniti G, available from $369 per month for 39 months with a $2,499 down payment. Available until February 28th, the offer is applicable for the G37 Coupe Journey with the Premium Package.

If you are not interested in none of this offers, you need to know that at the end of every month, most of the automakers will provide better deals as they will give volume incentives to the dealers who will sell the cars at a lower price in order to hit their volume goal.