Leasing is a good choice for several drivers, but confusing jargon, percentages, numbers and sneaky dealers steer people in another direction. Right now car manufacturers are offering to the public several of cheap car lease deals never seen before. Now tons of consumers are opting to lease instead of buy a new car.
Firstly, before making your choice whether to lease or buy, I would like to debunk a few car leasing myths.
#1: Leasing Will Be More Costly Compared To Buying
When you want and can pay for a new car in cash and want to keep it after your loan is finished being paid off, then maybe buying would be a good idea. But, if you want to exchange your car before you have finished paying everything off on your loan then leasing is the best option for you.
If you have the desire to get the newest car models on a frequent basis, it is doubtful that your exchanged car will make up the balance of the loan. This will put you deeper in debt if you purchase a new car. Leasing enables you to drive a new top of the line car for a specified time period. When the term is up you can get a new car lease with zero added debt.
#2: You Cannot Haggle for a Leasing Deal
Similarly to when you buy a brand new car, you will have plenty of room for negotiating cheap car lease deals. Some important things to negotiate:
- Capitalized Cost: This is the sales price of a new car. You can discuss this with your car dealer just like you would when buying a vehicle. Get the advantage through knowledge of the MSRP as well as the factory invoice price, previous to you visiting the dealership. If you can reduce from looking at the MSRP, you will get a better deal.
- Money Factor: When looking for the lowest price leasing options then you need to get familiar with the money factor. This is expressed as a miniscule decimal number, lower the numbers mean better deals. To calculate the interest rate multiple the factor by 2,400. Request for the dealer to show you the money factor for the specific car.
- Residual Value: This is the car value at the end of your lease term. It is shown as a percentage. A greater percentage means you will pay less from the capital cost for the course of a lease. Automobiles that retain over half of their values after one year are the best lease deals.
#3: Leasing Gives You Zero Tax Break
Some states pay sales tax on new car monthly payments, in some it is mandatory. This is the equivalent whether you are buying or leasing. Because you make a smaller number payments for a lease, you will be paying less in taxes.
#4: Leasing Fees Outweigh the Benefits
Prior to agreeing to signing a lease you should be aware of all the fees that you will be incur over your lease term. Be positive that the mileage allowance is adequate for your driving requirements, if it isn’t then negotiate for a greater limit. Although your monthly payments will increase it will prevent you from paying penalty fee for going over your limit.
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