Cash Car Convert

CCC054: What You Need to Know About Auto Leasing

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Let's explain the dangers of auto leasing!

Jeff Bartlett, deputy automotive editor at Consumer Reports“If you asked me what is the most expensive way to get a car, the answer would be: You only want to own it during its period of greatest depreciation and then move to another new vehicle.” “Well, that’s what leasing is.”

lease noun \ˈlēs\: a legal agreement that lets someone use a car, house, etc., for a period of time in return for payment

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How is the payment calculated?

  • Purchase price - how much you pay, you should negotiate just as hard as if you were buying
  • Cost of money - interest rate
  • Lease term - number of months of the lease
  • Residual value - estimated value of what the car will be worth at lease end
  • Sales tax - You will only pay taxes on the sum of your payments, which is the difference between the purchase price and residual value.

    • What is the average lease payment?

    Avg auto loan in Q4 2013 $471Avg auto lease in Q4 2013 $420

    What are the gotchas with leasing?

    • Paying too much upfront
    • Forgetting to buy gap insurance
    • Underestimating you miles driven
    • Not maintaining the car
    • Leasing for too long

      • What types of auto leases are there?

      Closed-end Leases which are mostly consumer leasesOpen-end Leases

      Open-end leases are primarily for commercial business leasing. 

      How do I know if I’m getting a good lease?

      Leasify - App to confirm you are getting the best lease. 99 cents.

      Leasify is a car lease advisor in your pocket. Leasify levels the automotive playing field by giving you the information you need to get the best deal on your new car lease.

      •  X-rays lease quotes to extract hidden fees and areas where you can improve your deal
      •  Serves as a financial decison-making tool with a sophisticated algorithm that generates a deal score
      • Displays what the dealer paid, as well as the average price paid, for any car in your zip code

        • Next week, I'll be talking about how to get out of a lease if you find yourself in one and want out.

        God Bless You!

        Links:

        Auto Leases Entice, but They’re Still Costly: http://nyti.ms/1wfmUju

        Merriam-Webster Online: http://www.merriam-webster.com/dictionary/lease

        Types of Car Leases – Explained: http://www.leaseguide.com/lease06/

        Lease Payment Formula Explained: http://www.leaseguide.com/lease08/

        Calculate Your Own Car Lease Payment: http://edmu.in/1x8lzwr

        5 dumb car leasing mistakes to avoid: http://bit.ly/1CdUwmq

        Experian Automotive report shows auto loans are still first choice in financing, but leasing has become more popular than ever: http://bit.ly/1CtQW8k

        Depreciation Infographic: How Fast Does My New Car Lose Value?:  http://edmu.in/WELal0

        Leasify App: https://itunes.apple.com/US/app/id912884639

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        Cash Car ConvertBy James Kinson
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