Car Leasing Basics
Over the past few years, the popularity of car leasing has
soared. When you compare leasing with buying a car and suffering
the humongous monthly installment fees, leasing provides a
better and more viable financial option.
For auto leasing, you need to know the tricks of the trade so
that you will not end up paying more than when you directly buy
the car. There are car dealers and manufacturers who can give
you your money's worth if you want to go for this option.
You will get a better deal out of the car dealers if you appear
knowledgeable about the auto leasing industry, so read up.
'Auto Leasing Defined'
You would "lease" a car by paying for the costs by which the
vehicle depreciates in value. You can calculate depreciation
costs by subtracting the car's value by the time that the lease
ends, from its original value. There are cars which depreciate
more than other brands. The rule of thumb is, the smaller the
amount that your car depreciates, the lesser the costs to lease.
Once you decide to go for leasing over buying a vehicle, you may
choose the one with the least depreciation value.
If you decide to go for this option, you need to learn about
"lease term". This is the number of months that the vehicle is
leased. Typically, leases last for 24, 36 or 48 months,
depending on your contract.
'Leasing or buying: Which option is kinder to your pocket?'
-Automobile leasing requires you to have a good credit, so if
your credit score is low, it is better to go for buying.
You may even be disapproved for a lease if your credit history
is not good. Or, at the very least, you will be required to pay
higher monthly dues.
-Leasing companies would need to profit from you.
They will invest capital on buying the car, then lease that car
out. Just like with any loan, their money shoudl earn interest
so you better consider this as well when considering the
advantages of buying.
-Make sure that you get the best deal out of car leasing by
comparing the monthly costs with the interest rates of your
local car dealer.
By making a note and comparing both prices, you would more or
less have an idea of which option to go for.
'Car Leasing Tips'
- When deciding on the model or make of the car that you will
lease, choose the Japanese and European cars. These are
basically the brands which have lower depreciation rates, as
compared to the American vehicles.
You will find out that most luxury cars have the lowest
depreciation values. Research, visit a local car dealer in your
area or ask friends who are currently leasing cars. They should
have some great tips to share with you on how to get the best
deal out of leasing cars.
-Leasing a car may put a big dent in yur budget when it comes to
car maintenance. You need to make sure that you are a
"car-friendly" user when you opt to go for auto leasing.
-Definitely go for leasing if you are the type who wants to own
the latest cars in the market. In the long run, leasing will be
a better option for you as compared to buying the latest car
model then trading in or selling the old one that you have.
-As much as possible, choose a shorter lease period. This is so
that you can optimize the warranty of the vehicle.
-Finally, avoid the long-term leases, because the car's value
will decrease by the time the lease ends, and this is mostly
when engine problems begin.