What Car Leasing Means<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com
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> </o>></o>One of the biggest complaints I receive from readers is the car dealer pulls the old Jedi mind trick on you and says "the selling price of the car on a lease is not important". If they tell you that, they are lying. The selling price is the gross cap cost, and the higher the gross cap cost, the higher your monthly payment. Only an idiot believes that the selling price (gross cap cost) of a lease does not matter. You MUST negotiate a lower selling price on a lease, just like you would if you are buying the car. Do not fall for this scam.<o
></o>Your Goals When Leasing A Vehicle<SUP>TM</SUP><o></o>
></o>2) Get as high a residual value as possible (If you're not buying the car at the end).
3) Get as low a money factor as possible.
4) Pay $0 down, $0 security deposit, $0 bank fees, $0 dealer fees.<o
></o>Leases don't have interest rates, they have a confusing term called "money factor". Dealers avoid telling you the selling price of the car, quoting only the monthly payments, so how do you know what you're signing up to? This is why dealers push leasing so hard. It's easy for them to hide the fact that they gave you nothing for your trade-in after you spent an hour negotiating top dollar for it. Many people think the heck with it, their company is paying why should they have to negotiate? Why should your company have to give the dealer full MSRP? Why should you have to sit there and listen to a salesman saying "come on, your company is paying for it, what does it matter?" Don't tell the dealer you are leasing until you agree on a selling price. Negotiate the car down to a good selling price as though you're buying it. Then if you want to lease, the purchase price becomes the gross cap cost for the lease. Higher residual values mean lower lease payments.<o
></o>MSRP - Manufacturer's Suggested Retail Price <?xml:namespace prefix = o ns = "urn:schemas-microsoft-comfficeffice" /><o></o>
While many salespeople are good, some live by this principle: <o></o>
<TABLE class=MsoNormalTable style="BACKGROUND: white; mso-cellspacing: 0in; mso-padding-alt: 7.5pt 7.5pt 7.5pt 7.5pt" cellSpacing=0 cellPadding=0 border=0><TBODY><TR style="mso-yfti-irow: 0; mso-yfti-firstrow: yes; mso-yfti-lastrow: yes"><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 7.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 7.5pt; PADDING-BOTTOM: 7.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 7.5pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent">"It is morally wrong to allow suckers to keep their money."<o></o>
</TD></TR></TBODY></TABLE>Thanks to tricky lease terminology, dealers can agree to all your demands, then steal it right back. You negotiate the price of a $25,000 car down to $22,000. Now you think you are getting a great deal. The only problem is some dealers still skirt the law and and fail to disclose this $22,000 "cap cost" (selling price) on the lease papers. Instead they use the $25,000 MSRP as the "cap cost" for their formula then show you only what your monthly payment will be, and not the selling price. Since lease payments are less than a loan to begin with, the payments are low and you are happy. On a 48 month lease, they packed your payment by $62 per month. If you speak up they make you feel guilty saying "We're saving you money here, you're paying less than you would on a loan. They just stole $3000 from you but you don't notice because it's spread out over 48 months. <o></o>
> </o>
The "purchase price" of your leased vehicle is critical! The higher it is, the higher your lease payments and the dealer makes more profit.
fficeffice" /><o></o>While many salespeople are good, some live by this principle: <o
></o><TABLE class=MsoNormalTable style="BACKGROUND: white; mso-cellspacing: 0in; mso-padding-alt: 7.5pt 7.5pt 7.5pt 7.5pt" cellSpacing=0 cellPadding=0 border=0><TBODY><TR style="mso-yfti-irow: 0; mso-yfti-firstrow: yes; mso-yfti-lastrow: yes"><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 7.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 7.5pt; PADDING-BOTTOM: 7.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 7.5pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent">"It is morally wrong to allow suckers to keep their money."<o
></o></TD></TR></TBODY></TABLE>Thanks to tricky lease terminology, dealers can agree to all your demands, then steal it right back. You negotiate the price of a $25,000 car down to $22,000. Now you think you are getting a great deal. The only problem is some dealers still skirt the law and and fail to disclose this $22,000 "cap cost" (selling price) on the lease papers. Instead they use the $25,000 MSRP as the "cap cost" for their formula then show you only what your monthly payment will be, and not the selling price. Since lease payments are less than a loan to begin with, the payments are low and you are happy. On a 48 month lease, they packed your payment by $62 per month. If you speak up they make you feel guilty saying "We're saving you money here, you're paying less than you would on a loan. They just stole $3000 from you but you don't notice because it's spread out over 48 months. <o
></o><TABLE class=MsoNormalTable style="BORDER-RIGHT: medium none; BORDER-TOP: medium none; BACKGROUND: #ffffcc; BORDER-LEFT: medium none; WIDTH: 90%; BORDER-BOTTOM: medium none; BORDER-COLLAPSE: collapse; mso-padding-alt: 1.5pt 1.5pt 1.5pt 1.5pt; mso-border-alt: outset #111111 1.5pt" cellSpacing=0 cellPadding=0 width="90%" border=1><TBODY><TR style="mso-yfti-irow: 0; mso-yfti-firstrow: yes"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #111111 1pt inset; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #111111 1pt inset; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt"></TD><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #111111 1pt inset; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt"></TD></TR><TR style="mso-yfti-irow: 1"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #111111 1pt inset; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">Lower Monthly Payments:
You only pay for depreciation during the term, your monthly payments are 30%-60% lower than a purchase loan.<o></o>
</TD><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt" vAlign=top>The selling price is usually MSRP:
Many dealers hide this value from you, diverting you to low monthly payments.<o></o>
</TD></TR><TR style="mso-yfti-irow: 2"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #111111 1pt inset; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">Great way to establish credit:
If you are a first time buyer or have bad credit, sometimes
leasing is the only way a dealer will finance you.<o></o>
</TD><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">Confusing finance Charges:
Some dealers try to confuse you and lie about the money factor and often they won't even tell you the money factor!<o></o>
</TD></TR><TR style="mso-yfti-irow: 3"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #111111 1pt inset; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt" vAlign=top>More Car, More Often:
Since monthly payments are lower, you get more car for
your money and drive a new car every two to three years.<o></o>
</TD><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">Some dealers refuse itemize your trade-in:
Dealers are not required by law to itemize your trade-in, and this opens the gate for people to get ripped off, by trading in their car, then not getting credited on the new lease for the trade-in. When buyers insist that dealer itemize their trade-in, the dealer refuses.<o></o>
</TD></TR><TR style="mso-yfti-irow: 4"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #111111 1pt inset; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt" vAlign=top>Fewer Maintenance Headaches:
If your lease term coincides with the manufacturer's
warranty, major repairs are always covered.<o></o>
</TD><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">It's a taxing issue!
Most states tax your monthly payment. But some states like <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-comffice:smarttags" /><st1:State w:st="on">Illinois</st1:State> and <st1lace w:st="on"><st1:State w:st="on">Texas</st1:State></st1lace> tax the full amount of the car even though you are only using up 50% of the value then returning it. Even worse, buy the car at the end of the lease, you again pay sales tax on that residual amount! Don't lease if you live in <st1:State w:st="on">Illinois</st1:State> or <st1lace w:st="on"><st1:State w:st="on">Texas</st1:State></st1lace>. While Texas does levy taxes on the FULL VALUE of leased vehicles as you state, a law was passed that EXEMPTS owners of these vehicles from paying taxes if they are primarily (more than 50%) a "personal use" (not used in the production of income) vehicle. Here is the link to the <st1lace w:st="on"><st1:State w:st="on">Texas</st1:State></st1lace> tax code concerning property taxes: http://www.hcad.org/TaxCode/2003/TCode03CH11.asp <o></o>
</TD></TR><TR style="mso-yfti-irow: 5"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #111111 1pt inset; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">Lower Up-Front Cash Outlay:
Supposedly. Leases should require little or no down payment, But many dealers require $2000 -$7000 down.<o></o>
</TD><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt" vAlign=top>High insurance costs:
Lessors require you have minimum insurance policies of $300,000.<o></o>
</TD></TR><TR style="mso-yfti-irow: 6"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #111111 1pt inset; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt" vAlign=top rowSpan=12>Just walk away!
At the end of a closed end lease, there's no hassle trying to get rid of a used car. You just turn in the car, pay an end of lease disposition fee, and walk away. <o></o>
New Software Tools Help You Lease Smarter
Expert Lease Pro.and Lease Wizard are now available to help you make smart leasing decisions. These programs weren't around a few years ago for your last lease. Had you used these tools, I bet you would not have signed the lease you're in now! <o></o>
Well, that's it folks, we're all out of advantages, but notice that the disadvantage column continues on down the page. Maybe we should put the old famous statements used by IBM in their computer manuals: <o></o>
</TD><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">If you lease the car you may not get the rebate.
This increases your cost by $500-$1500, or $13-$42 monthly,
so make sure you get the rebate! Some dealers try to get out of it.<o></o>
</TD></TR><TR style="mso-yfti-irow: 7"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">Lemon laws don't cover leases in some states
Example from <st1lace w:st="on"><st1:State w:st="on">Illinois</st1:State></st1lace> attorney general The Three-Day-Right-to-Cancel Law does not apply to an auto purchase, and Illinois Lemon Law applies only to new cars, not used car sales or leases.<o></o>
</TD></TR><TR style="mso-yfti-irow: 8"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">Misleading dealer lease ads.
See that $275 per month BMW ad? There's a tiny stock number of the only car there at that price. To get low monthly payments, you need huge down payments. The fine print states taxes are extra. For a $699 payment, add 6% <st1lace w:st="on"><st1:State w:st="on">Florida</st1:State></st1lace> tax: $740.94. <o></o>
</TD></TR><TR style="mso-yfti-irow: 9"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">Long-term cost of leasing is more than the cost of buying:
It's more if you buy the car at the end. If long term financial benefits are your only interests you should buy. Some dealers perform an analysis of Buy vs. Lease, and show leasing always cheaper. Always check their numbers.<o></o>
</TD></TR><TR style="mso-yfti-irow: 10"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">Mileage limits:
Leases limit you to 12000 miles/year, some are 10,000 miles. My friend paid $1400 at the end of his BMW lease for excess mileage. Those trips you took come back to haunt you, and it's time to pay the piper.<o></o>
</TD></TR><TR style="mso-yfti-irow: 11"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">You are responsible for program maintenance.
Better keep damn good records of every oil change, tune up, etc. and do them on schedule too. Don't give them any chance to claim excess wear and tear.<o></o>
</TD></TR><TR style="mso-yfti-irow: 12"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">Some have large up front fees:
Leases used to be $0 down, $0 deposit. Even ads touting $0 down have some fees up front. Down payments create the illusion of lower monthly payments. To accurately figure your total cost of the lease, add up all down payments, fees.<o></o>
</TD></TR><TR style="mso-yfti-irow: 13"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">Excess wear and tear clauses:
They could nit pick when you bring the car back. They can find a way to keep your "refundable security deposit" to offset claims of excess wear and tear.<o></o>
</TD></TR><TR style="mso-yfti-irow: 14"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">All 4 tires must match!
This is in every lease contract. Leasing companies charge you for mismatched tires, and they charge MSRP, which you can get cheaper in a tire shop.<o></o>
</TD></TR><TR style="mso-yfti-irow: 15"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">Too much fraud and unfair selling practices:
Florida Attorney General settled with <st1lace w:st="on"><st1:City w:st="on">Toyota</st1:City></st1lace> regarding automobile leasing and 2,200 consumers got partial refunds. People in <st1:State w:st="on">Florida</st1:State> and <st1lace w:st="on"><st1:country-region w:st="on">Georgia</st1:country-region></st1lace> complained they were tricked into signing leases, when they thought they were buying.
People With Ford Leases Click Here!<o></o>
</TD></TR><TR style="mso-yfti-irow: 16"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">Accidents may trigger early termination:
Your lease is "terminated," and you're obligated to pay off the lease. Car insurance covers the damages, but not the cost of paying off the lease. You'll need "gap insurance" for that. You should buy gap insurance when you lease, or put down less than 20% on a purchase. But don't buy it from the dealer.<o></o>
</TD></TR><TR style="mso-yfti-irow: 17; mso-yfti-lastrow: yes"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">People want out of their lease early.
Dealers pay your penalties and buy you out of your current lease, but they just finance all that debt into the new lease. You think the dealer is giving something for a car you don't even own. They dipped you from one lease into another, now you are paying off 2 leases. <o></o>
</TD></TR></TBODY></TABLE>
<o<?xml:namespace prefix = v ns = "urn:schemas-microsoft-com:vml" /><v:shapetype id=_x0000_t75 stroked="f" filled="f" path="m@4@5l@4@11@9@11@9@5xe" oreferrelative="t" o:spt="75" coordsize="21600,21600"><v:stroke joinstyle="miter"></v:stroke><v:formulas><v:f eqn="if lineDrawn pixelLineWidth 0"></v:f><v:f eqn="sum @0 1 0"></v:f><v:f eqn="sum 0 0 @1"></v:f><v:f eqn="prod @2 1 2"></v:f><v:f eqn="prod @3 21600 pixelWidth"></v:f><v:f eqn="prod @3 21600 pixelHeight"></v:f><v:f eqn="sum @0 0 1"></v:f><v:f eqn="prod @6 1 2"></v:f><v:f eqn="prod @7 21600 pixelWidth"></v:f><v:f eqn="sum @8 21600 0"></v:f><v:f eqn="prod @7 21600 pixelHeight"></v:f><v:f eqn="sum @10 21600 0"></v:f></v:formulas><vath o:connecttype="rect" gradientshapeok="t" o:extrusionok="f"></vath><o:lock aspectratio="t" v:ext="edit"></o:lock></v:shapetype><v:shape id=_x0000_i1025 style="WIDTH: 26.25pt; HEIGHT: 25.5pt; mso-wrap-distance-left: 3.75pt; mso-wrap-distance-top: 3.75pt; mso-wrap-distance-right: 3.75pt; mso-wrap-distance-bottom: 3.75pt" alt="" type="#_x0000_t75"><v:imagedata o:href="http://carbuyingtips.com/pics/smile.gif" src="file:///C:\DOCUME~1\MIKECH~1\LOCALS~1\Temp\msohtml1\03\clip_image001.gif"></v:imagedata></v:shape>Advantages Of Leasing<o></o>
referrelative="t" o:spt="75" coordsize="21600,21600"><v:stroke joinstyle="miter"></v:stroke><v:formulas><v:f eqn="if lineDrawn pixelLineWidth 0"></v:f><v:f eqn="sum @0 1 0"></v:f><v:f eqn="sum 0 0 @1"></v:f><v:f eqn="prod @2 1 2"></v:f><v:f eqn="prod @3 21600 pixelWidth"></v:f><v:f eqn="prod @3 21600 pixelHeight"></v:f><v:f eqn="sum @0 0 1"></v:f><v:f eqn="prod @6 1 2"></v:f><v:f eqn="prod @7 21600 pixelWidth"></v:f><v:f eqn="sum @8 21600 0"></v:f><v:f eqn="prod @7 21600 pixelHeight"></v:f><v:f eqn="sum @10 21600 0"></v:f></v:formulas><vath o:connecttype="rect" gradientshapeok="t" o:extrusionok="f"></vath><o:lock aspectratio="t" v:ext="edit"></o:lock></v:shapetype><v:shape id=_x0000_i1025 style="WIDTH: 26.25pt; HEIGHT: 25.5pt; mso-wrap-distance-left: 3.75pt; mso-wrap-distance-top: 3.75pt; mso-wrap-distance-right: 3.75pt; mso-wrap-distance-bottom: 3.75pt" alt="" type="#_x0000_t75"><v:imagedata o:href="http://carbuyingtips.com/pics/smile.gif" src="file:///C:\DOCUME~1\MIKECH~1\LOCALS~1\Temp\msohtml1\03\clip_image001.gif"></v:imagedata></v:shape>Advantages Of Leasing<o></o><v:shape id=_x0000_i1026 style="WIDTH: 25.5pt; HEIGHT: 27.75pt; mso-wrap-distance-left: 2.25pt; mso-wrap-distance-top: 2.25pt; mso-wrap-distance-right: 2.25pt; mso-wrap-distance-bottom: 2.25pt" alt="" type="#_x0000_t75"><v:imagedata o:href="http://carbuyingtips.com/pics/frown.gif" src="file:///C:\DOCUME~1\MIKECH~1\LOCALS~1\Temp\msohtml1\03\clip_image002.gif"></v:imagedata></v:shape>Disadvantages of Leasing:<o></o>
></o>You only pay for depreciation during the term, your monthly payments are 30%-60% lower than a purchase loan.<o
></o></TD><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt" vAlign=top>The selling price is usually MSRP:
Many dealers hide this value from you, diverting you to low monthly payments.<o
></o></TD></TR><TR style="mso-yfti-irow: 2"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #111111 1pt inset; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">Great way to establish credit:
If you are a first time buyer or have bad credit, sometimes
leasing is the only way a dealer will finance you.<o
></o></TD><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">Confusing finance Charges:
Some dealers try to confuse you and lie about the money factor and often they won't even tell you the money factor!<o
></o></TD></TR><TR style="mso-yfti-irow: 3"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #111111 1pt inset; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt" vAlign=top>More Car, More Often:
Since monthly payments are lower, you get more car for
your money and drive a new car every two to three years.<o
></o></TD><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">Some dealers refuse itemize your trade-in:
Dealers are not required by law to itemize your trade-in, and this opens the gate for people to get ripped off, by trading in their car, then not getting credited on the new lease for the trade-in. When buyers insist that dealer itemize their trade-in, the dealer refuses.<o
></o></TD></TR><TR style="mso-yfti-irow: 4"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #111111 1pt inset; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt" vAlign=top>Fewer Maintenance Headaches:
If your lease term coincides with the manufacturer's
warranty, major repairs are always covered.<o
></o></TD><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">It's a taxing issue!
Most states tax your monthly payment. But some states like <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com
ffice:smarttags" /><st1:State w:st="on">Illinois</st1:State> and <st1lace w:st="on"><st1:State w:st="on">Texas</st1:State></st1lace> tax the full amount of the car even though you are only using up 50% of the value then returning it. Even worse, buy the car at the end of the lease, you again pay sales tax on that residual amount! Don't lease if you live in <st1:State w:st="on">Illinois</st1:State> or <st1lace w:st="on"><st1:State w:st="on">Texas</st1:State></st1lace>. While Texas does levy taxes on the FULL VALUE of leased vehicles as you state, a law was passed that EXEMPTS owners of these vehicles from paying taxes if they are primarily (more than 50%) a "personal use" (not used in the production of income) vehicle. Here is the link to the <st1lace w:st="on"><st1:State w:st="on">Texas</st1:State></st1lace> tax code concerning property taxes: http://www.hcad.org/TaxCode/2003/TCode03CH11.asp <o></o></TD></TR><TR style="mso-yfti-irow: 5"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #111111 1pt inset; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">Lower Up-Front Cash Outlay:
Supposedly. Leases should require little or no down payment, But many dealers require $2000 -$7000 down.<o
></o></TD><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt" vAlign=top>High insurance costs:
Lessors require you have minimum insurance policies of $300,000.<o
></o></TD></TR><TR style="mso-yfti-irow: 6"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #111111 1pt inset; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt" vAlign=top rowSpan=12>Just walk away!
At the end of a closed end lease, there's no hassle trying to get rid of a used car. You just turn in the car, pay an end of lease disposition fee, and walk away. <o
></o>New Software Tools Help You Lease Smarter
Expert Lease Pro.and Lease Wizard are now available to help you make smart leasing decisions. These programs weren't around a few years ago for your last lease. Had you used these tools, I bet you would not have signed the lease you're in now! <o
></o>Well, that's it folks, we're all out of advantages, but notice that the disadvantage column continues on down the page. Maybe we should put the old famous statements used by IBM in their computer manuals: <o
></o>"This space intentionally left blank"<o></o>
></o>This increases your cost by $500-$1500, or $13-$42 monthly,
so make sure you get the rebate! Some dealers try to get out of it.<o
></o></TD></TR><TR style="mso-yfti-irow: 7"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">Lemon laws don't cover leases in some states
Example from <st1
lace w:st="on"><st1:State w:st="on">Illinois</st1:State></st1lace> attorney general The Three-Day-Right-to-Cancel Law does not apply to an auto purchase, and Illinois Lemon Law applies only to new cars, not used car sales or leases.<o></o></TD></TR><TR style="mso-yfti-irow: 8"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">Misleading dealer lease ads.
See that $275 per month BMW ad? There's a tiny stock number of the only car there at that price. To get low monthly payments, you need huge down payments. The fine print states taxes are extra. For a $699 payment, add 6% <st1
lace w:st="on"><st1:State w:st="on">Florida</st1:State></st1lace> tax: $740.94. <o></o></TD></TR><TR style="mso-yfti-irow: 9"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">Long-term cost of leasing is more than the cost of buying:
It's more if you buy the car at the end. If long term financial benefits are your only interests you should buy. Some dealers perform an analysis of Buy vs. Lease, and show leasing always cheaper. Always check their numbers.<o
></o></TD></TR><TR style="mso-yfti-irow: 10"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">Mileage limits:
Leases limit you to 12000 miles/year, some are 10,000 miles. My friend paid $1400 at the end of his BMW lease for excess mileage. Those trips you took come back to haunt you, and it's time to pay the piper.<o
></o></TD></TR><TR style="mso-yfti-irow: 11"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">You are responsible for program maintenance.
Better keep damn good records of every oil change, tune up, etc. and do them on schedule too. Don't give them any chance to claim excess wear and tear.<o
></o></TD></TR><TR style="mso-yfti-irow: 12"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">Some have large up front fees:
Leases used to be $0 down, $0 deposit. Even ads touting $0 down have some fees up front. Down payments create the illusion of lower monthly payments. To accurately figure your total cost of the lease, add up all down payments, fees.<o
></o></TD></TR><TR style="mso-yfti-irow: 13"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">Excess wear and tear clauses:
They could nit pick when you bring the car back. They can find a way to keep your "refundable security deposit" to offset claims of excess wear and tear.<o
></o></TD></TR><TR style="mso-yfti-irow: 14"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">All 4 tires must match!
This is in every lease contract. Leasing companies charge you for mismatched tires, and they charge MSRP, which you can get cheaper in a tire shop.<o
></o></TD></TR><TR style="mso-yfti-irow: 15"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">Too much fraud and unfair selling practices:
Florida Attorney General settled with <st1
lace w:st="on"><st1:City w:st="on">Toyota</st1:City></st1lace> regarding automobile leasing and 2,200 consumers got partial refunds. People in <st1:State w:st="on">Florida</st1:State> and <st1lace w:st="on"><st1:country-region w:st="on">Georgia</st1:country-region></st1lace> complained they were tricked into signing leases, when they thought they were buying. People With Ford Leases Click Here!<o
></o></TD></TR><TR style="mso-yfti-irow: 16"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">Accidents may trigger early termination:
Your lease is "terminated," and you're obligated to pay off the lease. Car insurance covers the damages, but not the cost of paying off the lease. You'll need "gap insurance" for that. You should buy gap insurance when you lease, or put down less than 20% on a purchase. But don't buy it from the dealer.<o
></o></TD></TR><TR style="mso-yfti-irow: 17; mso-yfti-lastrow: yes"><TD style="BORDER-RIGHT: #111111 1pt inset; PADDING-RIGHT: 1.5pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 1.5pt; PADDING-BOTTOM: 1.5pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 1.5pt; BORDER-BOTTOM: #111111 1pt inset; BACKGROUND-COLOR: transparent; mso-border-alt: inset #111111 .75pt; mso-border-left-alt: inset #111111 .75pt; mso-border-top-alt: inset #111111 .75pt">People want out of their lease early.
Dealers pay your penalties and buy you out of your current lease, but they just finance all that debt into the new lease. You think the dealer is giving something for a car you don't even own. They dipped you from one lease into another, now you are paying off 2 leases. <o
></o></TD></TR></TBODY></TABLE>
> </o>The "purchase price" of your leased vehicle is critical! The higher it is, the higher your lease payments and the dealer makes more profit.
A large cap cost reduction (down payment) hides a bad lease.
Many dealers require huge down payments at inception. The fine print in a BMW ad lists fees and down payments totaling $5289! I thought the whole idea of leasing is little or no down payment. On the BMW ad, they divert your attention to the low monthly payment of $275, but let's add up how much the entire lease is costing us. You must amortize the $5289 down into the 30 months of the lease. This means your effective average monthly payments during the 30 month lease will be $275 + $5289/30 = $451 See what I mean? They mislead you into thinking your monthly payments are only $275, which is right, but it's actually costing you $451 because you are only focused on the low monthly payment, ignoring what they did to you up front.
Zero Down does not mean you owe "zero". It just means you don't have to put money down up front.
Some dealers mislead you "$0 down payment" ads. Your brain makes you think you don't have to put any money at all down, when in reality, it means the down payment part of your inception costs is $0. Confused? Remember, their definition of down payment is cap cost reduction. The other fees due at closing (i.e. dealer fees, acquisition fees, bank fees, add up to over $1000. So "0 Down" does not mean zero down. They can shift fees to the end of the lease in the form of disposition or termination fees, or into the cap cost. Closing costs should always be used in the calculations to tell you how much the entire lease will cost you.
Many dealers require huge down payments at inception. The fine print in a BMW ad lists fees and down payments totaling $5289! I thought the whole idea of leasing is little or no down payment. On the BMW ad, they divert your attention to the low monthly payment of $275, but let's add up how much the entire lease is costing us. You must amortize the $5289 down into the 30 months of the lease. This means your effective average monthly payments during the 30 month lease will be $275 + $5289/30 = $451 See what I mean? They mislead you into thinking your monthly payments are only $275, which is right, but it's actually costing you $451 because you are only focused on the low monthly payment, ignoring what they did to you up front.
Zero Down does not mean you owe "zero". It just means you don't have to put money down up front.
Some dealers mislead you "$0 down payment" ads. Your brain makes you think you don't have to put any money at all down, when in reality, it means the down payment part of your inception costs is $0. Confused? Remember, their definition of down payment is cap cost reduction. The other fees due at closing (i.e. dealer fees, acquisition fees, bank fees, add up to over $1000. So "0 Down" does not mean zero down. They can shift fees to the end of the lease in the form of disposition or termination fees, or into the cap cost. Closing costs should always be used in the calculations to tell you how much the entire lease will cost you.
<TABLE class=MsoNormalTable style="BACKGROUND: white; BORDER-COLLAPSE: collapse; mso-padding-alt: 3.0pt 3.0pt 3.0pt 3.0pt" cellSpacing=0 cellPadding=0 border=0><TBODY><TR style="HEIGHT: 14.25pt; mso-yfti-irow: 0; mso-yfti-firstrow: yes"><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3pt; PADDING-BOTTOM: 3pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3pt; BORDER-BOTTOM: #e0dfe3; HEIGHT: 14.25pt; BACKGROUND-COLOR: transparent" vAlign=top rowSpan=2>Leasing terminology confuses sharpest of people. Print out this article and take it with you as you shop. Better yet, study it and know all terms and how they are interrelated before you go shopping. <o></o>
Acquisition Fee: A fee charged by the leasing company, usually $250 - $500 and is sometimes amortized in the monthly payment. Sometimes you pay the fee up front at inception. It's pretty hard to negotiate out either the acquisition fee or termination fee. Don't ever sign a lease that has both. Here's why this fee is such a joke. They claim it's a necessary fee to process the lease paperwork. But think about this: Has your bank ever charged you an acquisition fee for a car loan? <o></o>
Adjusted Capitalized Cost: Also called Net Capitalized Cost. This is the "capitalized cost" (selling price), less deductions to reduce the price of the car, like down payment, non-cash credits, trade-in credit, rebate. Adjusted cap cost is used to calculate your base monthly payment. Think of it as "amount financed". <o></o>
Bank Fee: Another fee they tack on for the leasing company. They should call it the put my wife in a Beamer fee. See also Dealer Service Fee. <o></o>
Base Monthly Payment: The part of your monthly payment that is made up of just the depreciation during the lease. This is calculated as (Net Capitalized Cost - Residual)÷ (number of months in lease). The base monthly payment is added to your monthly interest and tax to arrive at your total monthly payment. <o></o>
Car Buying Services:
These are useful sites <o></o>
Base Monthly Payment: The part of your monthly payment that is made up of just the depreciation during the lease. This is calculated as (Net Capitalized Cost - Residual)÷ (number of months in lease). The base monthly payment is added to your monthly interest and tax to arrive at your total monthly payment. <o></o>
Car Buying Services:
These are useful sites like InvoiceDealers, Autoweb, Car.com, Autobytel, CarsDirect , and AutoUSA that have networks of over 2000 participating member car dealers that usually offer better pricing to internet based referrals to their dealership. This is because a referral is handed to them on a silver platter, and you deal with a salaried fleet manager, not commissioned salespeople. Everyone leasing a car should try all these services, since they are free and dealers can belong to more than one service. They may give better pricing through the service they like the best, or the one who sends them the most referrals. So try them all for best results. Use the quotes you receive to compare against your best deals and see which is better. <o></o>
Capitalized Cost: The selling price of the car, options, warranties, insurance, rust proofing, or other goodies. Think of this as the value of your car at the beginning of the lease, whereas the residual value is the value of the car at the end of the lease. <o></o>
that have networks of over 2000 participating member car dealers that usually offer better pricing to internet based referrals to their dealership. This is because a referral is handed to them on a silver platter, and you deal with a salaried fleet manager, not a lot rat. Everyone leasing a car should try all these services, since they are free and dealers can belong to more than one service. They may give better pricing through the service they like the best, or the one who sends them the most referrals. So try them all for best results. Use the quotes you receive to compare against your best deals and see which is better. <o></o>
Capitalized Cost: The selling price of the car, options, warranties, insurance, rust proofing, or other goodies. Think of this as the value of your car at the beginning of the lease, whereas the residual value is the value of the car at the end of the lease. <o></o>
<o></o>
</TD><TD style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 14.25pt; BACKGROUND-COLOR: transparent" width=0 height=19></TD></TR><TR style="HEIGHT: 14.25pt; mso-yfti-irow: 1; mso-yfti-lastrow: yes"><TD style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 14.25pt; BACKGROUND-COLOR: transparent" width=0 height=19></TD></TR></TBODY></TABLE>
<o></o>
<TABLE class=MsoNormalTable style="BACKGROUND: white; BORDER-COLLAPSE: collapse; mso-padding-alt: 0in 0in 0in 0in" cellSpacing=0 cellPadding=0 border=0><TBODY><TR style="mso-yfti-irow: 0; mso-yfti-firstrow: yes; mso-yfti-lastrow: yes"><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 0in; BORDER-TOP: #e0dfe3; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; BORDER-LEFT: #e0dfe3; PADDING-TOP: 0in; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent">Capitalized Cost Reduction: A fancy name for cash down. It's anything that reduces the capitalized cost before the monthly payment is calculated. It includes cash down, trade-in credit and manufacturer's rebate, etc. Usually they try not to give you the factory rebate if you lease. As far as the factory is concerned, the dealer still sold the car and still qualifies for the rebate. <o></o>
Closed End Lease: The only kind of lease you ever want to get. At the end just return the car, no obligations. You can buy it if you like at the residual value, but no obligated. <o></o>
Dealer Service Fee: A useless fee tacked on for more profit. If they lease you the car at MSRP, they are already making too much money. They should call it the put my wife in a Beamer fee. See also Bank Fee. <o></o>
Depreciation: The drop in value that the car is predicted to have during your lease. It's the difference between the adjusted capitalized cost and the residual value. Depreciation is part of what your monthly payments are paying for. That's why you want the lowest cap cost and the highest residual value: <o></o>
Monthly Depreciation Fee = ( Net Cap Cost - Residual ) ÷ Lease Term <o></o>
If you lease a car for 36 months whose net cap cost is $18000 and the dealer says the car is worth $14000 at lease end, your monthly depreciation fee is (18000-14000) ÷ 36 = $111.11. This is 1 of 3 components of your monthly payment, along with finance fee (interest) and taxes.
<o></o>
Disposition Fee: A charge by the leasing company at lease end to "fix it up for resale". Many people don't realize this fee is not declared on the first page of the lease with the other numbers, it's buried in the fine print of the "end of lease requirements" section. Some dealers claim this helps pay for cleaning up the car before resale. But they charge the next owner for that, right? Did you ever hear the dealer justify their high cost on a used car by saying they "had to recondition it"? The dealer is trying to collect twice. Tell them to let the next owner of the car pay for it, not you. <o></o>
Down Payment: The amount of cash you put down to reduce the capitalized cost, and hence your monthly payments. It is subtracted from the car's capitalized cost, before the monthly payment is calculated. <o></o>
Early Termination Fee: A very nasty penalty that you must pay if you terminate your lease early or total the car in a wreck. This could be several thousand dollars. Early lease termination should be avoided at all costs. Ending a lease is like ending a marriage. It's very painful and costs a lot of money. It's similar to a red neck divorce: somewhere, somehow, somebody's going to lose a trailer. People With Ford Leases Click Here. <o></o>
Excess Mileage: You are limited to 10,000 - 15,000 miles annually. Any more and you'll pay fines of 15 cents per mile. Watch the mileage, or you'll owe a lot at the end. An extra 2,000 miles a year on a 3 year lease could cost you $900. Don't pay for extra mileage up front, you won't get a refund if you don't drive excess miles. The dealers don't tell you about this little clause, it's buried in the writing, and by signing the lease you effectively said that you read and understood everything. <o></o>
Excess Wear & Tear: Damage or wear on the car beyond normal wear and tear. Many people are frustrated when hit with a large bill for "wear and tear" at the end of the lease, even if the car is in good condition. Read the lease and understand what it says about excess wear and tear. Have the dealer explain their standards of "excess" wear. Try to get out of paying a security deposit. The car must have 4 matching tires, or they'll bill you for 4 new tires at full retail. <o></o>
Finance Fee: Also called Lease Charge, or more commonly, Rent Charge, this is the "interest" or profit that the leasing company charges you. Here's how they calculate it: <o></o>
Finance Fee = ( Net Cap Cost + Residual ) × Money Factor.
<o></o>
></o>
Gross Capitalized Cost: Selling price of the car. Sometimes dealer acquisition fees are included in this amount. <o></o>
Insurance: Leases require huge insurance coverage: bodily injury or death liability: $100,000 per person / $300,000 per occurrence, property damage liability: $50,000, comprehensive & collision for full vehicle value with a maximum $500 deductible. <o></o>
Interest Rate: They don't quote interest rates with car leases. This way you can't check their numbers and discover that they forgot to give you credit for your trade-in, or slipped in that credit life insurance undetected. They quote "Money Factors" See definition below. To arrive at the equivalent APR interest, multiply the money factor by 2400. <o></o>
MSRP: Manufacturer's Suggested Retail Price, or "sticker price. "Never pay MSRP. <o></o>
Money Factor: A number used to calculate finance charges (interest) for your monthly payment. To get the APR, multiply the money factor by 2,400. For example, a money factor of .003333, yields an interest rate of (.003333*2400) = 8%. If you were unaware of the 2400, how could you check their numbers? This is how they hide extras, and slip in credit life insurance, because you can't tell what makes up your monthly payment, or even how to calculate it, until now. When converting money factor to APR, it should at least be comparable to, or lower than local new car loan interest rates. Like interest, the lower the money factor, the lower your monthly payments. Ford has a strange way of calculating money factor that is different from the rest of the industry. People With Ford Leases Click Here! <o></o>
Monthly Payment: The monthly lease payments made over the term of the lease. Monthly lease payments are made up of 3 parts: 1) depreciation, 2) rent charge and 3) sales tax. You pay the leasing company for the loss in value of its car, as well as interest on the money they have tied up in the car. Beware, many ads show a low ball monthly payment that don't include tax. The ad for a BMW or Lexus for a $399 a month has fine print that says "plus tax", meaning they are understating the real monthly payment by $23.94 (6% tax in <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-comffice:smarttags" /><st1lace w:st="on"><st1:State w:st="on">Florida.</st1:State></st1lace>). <o></o>
<st1lace w:st="on"><st1:City w:st="on">Moron</st1:City></st1lace>: A person who leases a car and does not obtain gap insurance. A person who leases a car and 2 weeks later decides he wants out and thinks he can just take the car back and dump it off. <o></o>
Net Trade-in Allowance: This is the amount the dealer is giving you for your trade-in, after paying off any loan balance on your trade-in. If you were upside down on your loan, whatever is left is financed into the lease, effectively increasing the adjusted capital cost of the leased car. They don't go out of their way to inform you about this either. Many dealers run ads yelling out "We'll pay off your car no matter how much you own". So you are tricked into thinking your old loan is gone, but it's not. They just moved your loan balance over to the lease and blended it in. <o></o>
Purchase Option Fee: A fee charged if you opt to buy the vehicle at the end of a lease. Negotiate it out. That's icing that belongs on your cake, not theirs. <o></o>
Purchase Option Price: Selling price of the vehicle if you buy it at the end of the lease. This is usually the residual value. <o></o>
Residual Value: The value leasing companies estimated the car will be worth at lease end, expressed as % MSRP. The residual value affects the amount of your monthly payment. Dealers have books estimating the residual value and the higher the residual value, the less you will pay each month to lease your car. You may get lucky and it will be lower than market value when the lease is up. You can then buy and sell the car, trade it in for something else, or just walk away. Ask your bank or credit union for residual values. I'll point you to sites that give the residual values later on in this article. <o></o>
Always know the residual value of the car by looking it up so you can verify they are not quoting too low an amount. If they quote a low residual value, your monthly payments will be higher because the depreciation is higher. <o></o>
Sales Tax: They usually tax the monthly lease payment at the local sales tax rate and add it to the base payment to get your total monthly payment. Check with the state to verify they are sending this full amount into the state or they could be in big trouble. <st1:State w:st="on">Illinois</st1:State> & <st1lace w:st="on"><st1:State w:st="on">Texas</st1:State></st1lace> dealers tax you on the full amount of the car, which is wrong, because you should only pay taxes on the portion you are using. <o></o>
Security Deposit: Usually equal to one month's payment paid up front as security for excess wear and tear. They usually call it "refundable", but you know they'll come up with some excuse to keep it at the end to keep it due to excess wear, or for new tires. <o></o>
Termination Fee: Another wasted fee. I still don't know why they need to charge this fee at the end, especially if they are already charging a disposition fee to "clean up the car" afterwards. Negotiate this toxic waste off the contract.
<o></o>
</TD></TR></TBODY></TABLE>
Leasing Glossary<?xml:namespace prefix = o ns = "urn:schemas-microsoft-comfficeffice" /><o></o>
fficeffice" /><o></o>></o>Acquisition Fee: A fee charged by the leasing company, usually $250 - $500 and is sometimes amortized in the monthly payment. Sometimes you pay the fee up front at inception. It's pretty hard to negotiate out either the acquisition fee or termination fee. Don't ever sign a lease that has both. Here's why this fee is such a joke. They claim it's a necessary fee to process the lease paperwork. But think about this: Has your bank ever charged you an acquisition fee for a car loan? <o
></o>Adjusted Capitalized Cost: Also called Net Capitalized Cost. This is the "capitalized cost" (selling price), less deductions to reduce the price of the car, like down payment, non-cash credits, trade-in credit, rebate. Adjusted cap cost is used to calculate your base monthly payment. Think of it as "amount financed". <o
></o>Bank Fee: Another fee they tack on for the leasing company. They should call it the put my wife in a Beamer fee. See also Dealer Service Fee. <o
></o>Base Monthly Payment: The part of your monthly payment that is made up of just the depreciation during the lease. This is calculated as (Net Capitalized Cost - Residual)÷ (number of months in lease). The base monthly payment is added to your monthly interest and tax to arrive at your total monthly payment. <o
></o>Car Buying Services:
These are useful sites <o
></o>Base Monthly Payment: The part of your monthly payment that is made up of just the depreciation during the lease. This is calculated as (Net Capitalized Cost - Residual)÷ (number of months in lease). The base monthly payment is added to your monthly interest and tax to arrive at your total monthly payment. <o
></o>Car Buying Services:
These are useful sites like InvoiceDealers, Autoweb, Car.com, Autobytel, CarsDirect , and AutoUSA that have networks of over 2000 participating member car dealers that usually offer better pricing to internet based referrals to their dealership. This is because a referral is handed to them on a silver platter, and you deal with a salaried fleet manager, not commissioned salespeople. Everyone leasing a car should try all these services, since they are free and dealers can belong to more than one service. They may give better pricing through the service they like the best, or the one who sends them the most referrals. So try them all for best results. Use the quotes you receive to compare against your best deals and see which is better. <o
></o>Capitalized Cost: The selling price of the car, options, warranties, insurance, rust proofing, or other goodies. Think of this as the value of your car at the beginning of the lease, whereas the residual value is the value of the car at the end of the lease. <o
></o>that have networks of over 2000 participating member car dealers that usually offer better pricing to internet based referrals to their dealership. This is because a referral is handed to them on a silver platter, and you deal with a salaried fleet manager, not a lot rat. Everyone leasing a car should try all these services, since they are free and dealers can belong to more than one service. They may give better pricing through the service they like the best, or the one who sends them the most referrals. So try them all for best results. Use the quotes you receive to compare against your best deals and see which is better. <o
></o>Capitalized Cost: The selling price of the car, options, warranties, insurance, rust proofing, or other goodies. Think of this as the value of your car at the beginning of the lease, whereas the residual value is the value of the car at the end of the lease. <o
></o><o
></o></TD><TD style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 14.25pt; BACKGROUND-COLOR: transparent" width=0 height=19></TD></TR><TR style="HEIGHT: 14.25pt; mso-yfti-irow: 1; mso-yfti-lastrow: yes"><TD style="BORDER-RIGHT: #e0dfe3; BORDER-TOP: #e0dfe3; BORDER-LEFT: #e0dfe3; BORDER-BOTTOM: #e0dfe3; HEIGHT: 14.25pt; BACKGROUND-COLOR: transparent" width=0 height=19></TD></TR></TBODY></TABLE>
<o
></o><TABLE class=MsoNormalTable style="BACKGROUND: white; BORDER-COLLAPSE: collapse; mso-padding-alt: 0in 0in 0in 0in" cellSpacing=0 cellPadding=0 border=0><TBODY><TR style="mso-yfti-irow: 0; mso-yfti-firstrow: yes; mso-yfti-lastrow: yes"><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 0in; BORDER-TOP: #e0dfe3; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; BORDER-LEFT: #e0dfe3; PADDING-TOP: 0in; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent">Capitalized Cost Reduction: A fancy name for cash down. It's anything that reduces the capitalized cost before the monthly payment is calculated. It includes cash down, trade-in credit and manufacturer's rebate, etc. Usually they try not to give you the factory rebate if you lease. As far as the factory is concerned, the dealer still sold the car and still qualifies for the rebate. <o
></o>Closed End Lease: The only kind of lease you ever want to get. At the end just return the car, no obligations. You can buy it if you like at the residual value, but no obligated. <o
></o>Dealer Service Fee: A useless fee tacked on for more profit. If they lease you the car at MSRP, they are already making too much money. They should call it the put my wife in a Beamer fee. See also Bank Fee. <o
></o>Depreciation: The drop in value that the car is predicted to have during your lease. It's the difference between the adjusted capitalized cost and the residual value. Depreciation is part of what your monthly payments are paying for. That's why you want the lowest cap cost and the highest residual value: <o
></o>Monthly Depreciation Fee = ( Net Cap Cost - Residual ) ÷ Lease Term <o
></o>If you lease a car for 36 months whose net cap cost is $18000 and the dealer says the car is worth $14000 at lease end, your monthly depreciation fee is (18000-14000) ÷ 36 = $111.11. This is 1 of 3 components of your monthly payment, along with finance fee (interest) and taxes.
<o
></o>Disposition Fee: A charge by the leasing company at lease end to "fix it up for resale". Many people don't realize this fee is not declared on the first page of the lease with the other numbers, it's buried in the fine print of the "end of lease requirements" section. Some dealers claim this helps pay for cleaning up the car before resale. But they charge the next owner for that, right? Did you ever hear the dealer justify their high cost on a used car by saying they "had to recondition it"? The dealer is trying to collect twice. Tell them to let the next owner of the car pay for it, not you. <o
></o>Down Payment: The amount of cash you put down to reduce the capitalized cost, and hence your monthly payments. It is subtracted from the car's capitalized cost, before the monthly payment is calculated. <o
></o>Early Termination Fee: A very nasty penalty that you must pay if you terminate your lease early or total the car in a wreck. This could be several thousand dollars. Early lease termination should be avoided at all costs. Ending a lease is like ending a marriage. It's very painful and costs a lot of money. It's similar to a red neck divorce: somewhere, somehow, somebody's going to lose a trailer. People With Ford Leases Click Here. <o
></o>Excess Mileage: You are limited to 10,000 - 15,000 miles annually. Any more and you'll pay fines of 15 cents per mile. Watch the mileage, or you'll owe a lot at the end. An extra 2,000 miles a year on a 3 year lease could cost you $900. Don't pay for extra mileage up front, you won't get a refund if you don't drive excess miles. The dealers don't tell you about this little clause, it's buried in the writing, and by signing the lease you effectively said that you read and understood everything. <o
></o>Excess Wear & Tear: Damage or wear on the car beyond normal wear and tear. Many people are frustrated when hit with a large bill for "wear and tear" at the end of the lease, even if the car is in good condition. Read the lease and understand what it says about excess wear and tear. Have the dealer explain their standards of "excess" wear. Try to get out of paying a security deposit. The car must have 4 matching tires, or they'll bill you for 4 new tires at full retail. <o
></o>Finance Fee: Also called Lease Charge, or more commonly, Rent Charge, this is the "interest" or profit that the leasing company charges you. Here's how they calculate it: <o
></o>Finance Fee = ( Net Cap Cost + Residual ) × Money Factor.
<o
></o><TABLE class=MsoNormalTable style="BACKGROUND: #ccffff; WIDTH: 100%; mso-cellspacing: 1.5pt; mso-padding-alt: 3.75pt 3.75pt 3.75pt 3.75pt" cellPadding=0 width="100%" border=0><TBODY><TR style="mso-yfti-irow: 0; mso-yfti-firstrow: yes; mso-yfti-lastrow: yes"><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent">You read correctly, it's not an error. They add Net Cap Cost and Residual. It's not double counting, it's a simple method to arrive at the finance fee without using complex formulas. This makes calculating rent charges for leasing much easier than those for loans, which use a more complex formula. The money factor takes into account the addition, so don't panic. To get the equivalent APR interest rate, multiply the money factor by 2400. This gives us an idea of what interest rate is being used as the "seed" into the rent charge formula. This is where the similarity between leases and loans ends. Loans use a complex formula for interest, and some calculators can figure out loan payments. Now here's the difference. Lease interest payments USE A DIFFERENT FORMULA than loans. For leases, I prefer to say "rent charge", which is less confusing than interest rate, so you don't use the wrong formula. Rent charge uses the Finance Fee formula above. A money factor of .00333 is "equivalent" to 8% APR, but it's not an interest rate, it's just a number used as a seed into their calculations. In a loan they have a fancy formula for interest, but with leases, rent charge = (Adjusted cap cost + residual) * money factor. With leasing, you don't need a business calculator to figure out the rent charge, just one that can add and multiply.<o></o>
</TD></TR></TBODY></TABLE>
Gap Insurance: If your leased car is stolen or totaled, your insurance will pay for the damage or loss. It won't help you make payments still owed to the leasing company. Gap insurance covers the gap, between the value of your car and the amount you still owe on your lease, including a possible penalty for early termination of the lease. It's illegal for a dealer to require that you buy it for any reason, including bad credit, or qualifying for a loan. If they say it's required, tell them to put that in writing, then turn it over to the State Attorney's office. Everyone who leases should buy gap insurance, but try to buy it through your insurance agent instead of the dealer, or you'll be charged double the cost. <oInterest on a loan and interest on a lease are NOT the same thing.<o></o>
></o>></o></TD></TR></TBODY></TABLE>
></o>Gross Capitalized Cost: Selling price of the car. Sometimes dealer acquisition fees are included in this amount. <o
></o>Insurance: Leases require huge insurance coverage: bodily injury or death liability: $100,000 per person / $300,000 per occurrence, property damage liability: $50,000, comprehensive & collision for full vehicle value with a maximum $500 deductible. <o
></o>Interest Rate: They don't quote interest rates with car leases. This way you can't check their numbers and discover that they forgot to give you credit for your trade-in, or slipped in that credit life insurance undetected. They quote "Money Factors" See definition below. To arrive at the equivalent APR interest, multiply the money factor by 2400. <o
></o>MSRP: Manufacturer's Suggested Retail Price, or "sticker price. "Never pay MSRP. <o
></o>Money Factor: A number used to calculate finance charges (interest) for your monthly payment. To get the APR, multiply the money factor by 2,400. For example, a money factor of .003333, yields an interest rate of (.003333*2400) = 8%. If you were unaware of the 2400, how could you check their numbers? This is how they hide extras, and slip in credit life insurance, because you can't tell what makes up your monthly payment, or even how to calculate it, until now. When converting money factor to APR, it should at least be comparable to, or lower than local new car loan interest rates. Like interest, the lower the money factor, the lower your monthly payments. Ford has a strange way of calculating money factor that is different from the rest of the industry. People With Ford Leases Click Here! <o
></o>Monthly Payment: The monthly lease payments made over the term of the lease. Monthly lease payments are made up of 3 parts: 1) depreciation, 2) rent charge and 3) sales tax. You pay the leasing company for the loss in value of its car, as well as interest on the money they have tied up in the car. Beware, many ads show a low ball monthly payment that don't include tax. The ad for a BMW or Lexus for a $399 a month has fine print that says "plus tax", meaning they are understating the real monthly payment by $23.94 (6% tax in <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com
ffice:smarttags" /><st1lace w:st="on"><st1:State w:st="on">Florida.</st1:State></st1lace>). <o></o><st1
lace w:st="on"><st1:City w:st="on">Moron</st1:City></st1lace>: A person who leases a car and does not obtain gap insurance. A person who leases a car and 2 weeks later decides he wants out and thinks he can just take the car back and dump it off. <o></o>Net Trade-in Allowance: This is the amount the dealer is giving you for your trade-in, after paying off any loan balance on your trade-in. If you were upside down on your loan, whatever is left is financed into the lease, effectively increasing the adjusted capital cost of the leased car. They don't go out of their way to inform you about this either. Many dealers run ads yelling out "We'll pay off your car no matter how much you own". So you are tricked into thinking your old loan is gone, but it's not. They just moved your loan balance over to the lease and blended it in. <o
></o>Purchase Option Fee: A fee charged if you opt to buy the vehicle at the end of a lease. Negotiate it out. That's icing that belongs on your cake, not theirs. <o
></o>Purchase Option Price: Selling price of the vehicle if you buy it at the end of the lease. This is usually the residual value. <o
></o>Residual Value: The value leasing companies estimated the car will be worth at lease end, expressed as % MSRP. The residual value affects the amount of your monthly payment. Dealers have books estimating the residual value and the higher the residual value, the less you will pay each month to lease your car. You may get lucky and it will be lower than market value when the lease is up. You can then buy and sell the car, trade it in for something else, or just walk away. Ask your bank or credit union for residual values. I'll point you to sites that give the residual values later on in this article. <o
></o>Always know the residual value of the car by looking it up so you can verify they are not quoting too low an amount. If they quote a low residual value, your monthly payments will be higher because the depreciation is higher. <o
></o><?xml:namespace prefix = v ns = "urn:schemas-microsoft-com:vml" /><v:shapetype id=_x0000_t75 stroked="f" filled="f" path="m@4@5l@4@11@9@11@9@5xe" oreferrelative="t" o:spt="75" coordsize="21600,21600"><v:stroke joinstyle="miter"></v:stroke><v:formulas><v:f eqn="if lineDrawn pixelLineWidth 0"></v:f><v:f eqn="sum @0 1 0"></v:f><v:f eqn="sum 0 0 @1"></v:f><v:f eqn="prod @2 1 2"></v:f><v:f eqn="prod @3 21600 pixelWidth"></v:f><v:f eqn="prod @3 21600 pixelHeight"></v:f><v:f eqn="sum @0 0 1"></v:f><v:f eqn="prod @6 1 2"></v:f><v:f eqn="prod @7 21600 pixelWidth"></v:f><v:f eqn="sum @8 21600 0"></v:f><v:f eqn="prod @7 21600 pixelHeight"></v:f><v:f eqn="sum @10 21600 0"></v:f></v:formulas><vath o:connecttype="rect" gradientshapeok="t" o:extrusionok="f"></vath><o:lock aspectratio="t" v:ext="edit"></o:lock></v:shapetype><v:shape id=_x0000_i1025 style="WIDTH: 187.5pt; HEIGHT: 45pt" target="top" alt="" type="#_x0000_t75" o:button="t" href="http://www.autoleasingsoftware.com/cgi-bin/partner.pl?Ostroff"><v:imagedata o:href="http://www.carbuyingtips.com/pics/ELPLink.gif" src="file:///C:\DOCUME~1\MIKECH~1\LOCALS~1\Temp\msohtml1\05\clip_image001.gif"></v:imagedata></v:shape>
Click Here to get ALG Residual Values<o></o>
referrelative="t" o:spt="75" coordsize="21600,21600"><v:stroke joinstyle="miter"></v:stroke><v:formulas><v:f eqn="if lineDrawn pixelLineWidth 0"></v:f><v:f eqn="sum @0 1 0"></v:f><v:f eqn="sum 0 0 @1"></v:f><v:f eqn="prod @2 1 2"></v:f><v:f eqn="prod @3 21600 pixelWidth"></v:f><v:f eqn="prod @3 21600 pixelHeight"></v:f><v:f eqn="sum @0 0 1"></v:f><v:f eqn="prod @6 1 2"></v:f><v:f eqn="prod @7 21600 pixelWidth"></v:f><v:f eqn="sum @8 21600 0"></v:f><v:f eqn="prod @7 21600 pixelHeight"></v:f><v:f eqn="sum @10 21600 0"></v:f></v:formulas><vath o:connecttype="rect" gradientshapeok="t" o:extrusionok="f"></vath><o:lock aspectratio="t" v:ext="edit"></o:lock></v:shapetype><v:shape id=_x0000_i1025 style="WIDTH: 187.5pt; HEIGHT: 45pt" target="top" alt="" type="#_x0000_t75" o:button="t" href="http://www.autoleasingsoftware.com/cgi-bin/partner.pl?Ostroff"><v:imagedata o:href="http://www.carbuyingtips.com/pics/ELPLink.gif" src="file:///C:\DOCUME~1\MIKECH~1\LOCALS~1\Temp\msohtml1\05\clip_image001.gif"></v:imagedata></v:shape>Click Here to get ALG Residual Values<o
></o>lace w:st="on"><st1:State w:st="on">Texas</st1:State></st1lace> dealers tax you on the full amount of the car, which is wrong, because you should only pay taxes on the portion you are using. <o></o>Security Deposit: Usually equal to one month's payment paid up front as security for excess wear and tear. They usually call it "refundable", but you know they'll come up with some excuse to keep it at the end to keep it due to excess wear, or for new tires. <o
></o>Termination Fee: Another wasted fee. I still don't know why they need to charge this fee at the end, especially if they are already charging a disposition fee to "clean up the car" afterwards. Negotiate this toxic waste off the contract.
<o
></o></TD></TR></TBODY></TABLE>
How Your Monthly Lease Payment Is Calculated:<?xml:namespace prefix = o ns = "urn:schemas-microsoft-comfficeffice" /><o></o>
fficeffice" /><o></o>> </o><TABLE class=MsoNormalTable style="BORDER-RIGHT: 4.5pt outset; BORDER-TOP: 4.5pt outset; BACKGROUND: white; BORDER-LEFT: 4.5pt outset; BORDER-BOTTOM: 4.5pt outset; mso-cellspacing: 1.5pt; mso-padding-alt: 3.75pt 3.75pt 3.75pt 3.75pt" cellPadding=0 border=1><TBODY><TR style="mso-yfti-irow: 0; mso-yfti-firstrow: yes; mso-yfti-lastrow: yes"><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; BACKGROUND: #ffffcc; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3">1) Monthly Depreciation Fee = ( Net Cap Cost - Residual ) ÷ Lease Term
2) Monthly Finance Charge = ( Net Cap Cost + Residual ) × Money Factor.
3) Sales Tax (Depreciation Fee + Finance Fee) x Tax rate<o></o>
</TD></TR></TBODY></TABLE>
In states like <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-comCalculating the components of your monthly payment
Your monthly lease payment consists of 3 components:<o></o>
Your monthly lease payment consists of 3 components:<o
></o>2) Monthly Finance Charge = ( Net Cap Cost + Residual ) × Money Factor.
3) Sales Tax (Depreciation Fee + Finance Fee) x Tax rate<o
></o></TD></TR></TBODY></TABLE>
ffice:smarttags" /><st1:State w:st="on">Illinois</st1:State>, <st1lace w:st="on"><st1:State w:st="on">Texas</st1:State></st1lace>, and a few others, they tax you according to the gross cap cost up front. This is very unfair because you are only using about 50% equity then returning the vehicle. <o></o>Finance charge is calculated by adding the cap cost to the residual value, then multiplying by money factor. They are not ripping you off, the money factor takes care of everything, and makes life easier. Assume you lease a Lexus SC300 for 36 months, with an adjusted cap cost of $35000. They give you a residual of 54% after 36 months ($18900). You can verify this too if you have the ALG Lease Residual Values. They disclose to you the money factor is .00333 (Equivalent to 8% APR). <o
></o>1) Monthly Depreciation Fee = ( $35000 - $18900 ) ÷ 36 = $447.22
2) Monthly Finance Charge = ( $35000 + $18900 ) × .00333 = $179.49
3) Sales Tax = ($447.22 + $179.49) * .06 (<st1
lace w:st="on"><st1:State w:st="on">Florida</st1:State></st1lace> Tax is 6%) = $37.60 <o></o>These three are then added up to arrive at your monthly payment: <o
></o>Total Monthly Payment For Lexus = $447.22 + $179.49 + $37.60 = $664.31 <o
></o>These 36 payments will cost you $23915. If you buy the car at its $18900 residual value, your total cost would be 23915+18900+ Up Front Fees = $42815 + up front fees. Up front fees are bank fee, dealer service fee, security, etc. Buying is cheaper in the long run. If you had bought the $35000 car with 8% APR over the same 3 years your monthly payments would be based on $37100 (6% <st1
lace w:st="on"><st1:State w:st="on">Florida</st1:State></st1lace> tax), ignoring luxury tax. Your monthly payment would be more at $1162.57, but your total loan cost is only $41852.84. This car had a small difference. I usually see a $3000-$6000 difference between buying and leasing. <o></o>Get paperwork from friends who have leased, use the spreadsheet to verify their numbers. When you check your numbers with the dealer's numbers your results should be within pennies. One dealer tried pulling a Jedi mind trick on my friend, who checked the numbers and saw they were $9.00 off per month, the dealer tried to pass it off on my friend's "error". He told him not to worry he was only "$9 off, no big deal". But it is a big deal, on a 48 month lease, that's $432 they are stealing from you. Whether you use tables or a calculator program, they should all be within pennies over the entire lease term. They all use the same formula, so don't let the dealer tell you that you calculated wrong. Bring leasing software along with you on a notebook PC and run his numbers right there. If you are ever doubtful about the dealer's numbers and they keep insisting that you are wrong, don't sign the deal! Go home and check the numbers again in a no pressure environment. <o
></o>Real World Example #1
Here's one from a reader who emailed me to say how they got scammed on a Toyota Camry lease. Before going in, the buyer researched all the prices and calculated the numbers in the table below. The dealer also calculated the numbers and showed them a lower monthly payment. Good deal right? Wrong! Examine the costs in the table:
<?xml:namespace prefix = o ns = "urn:schemas-microsoft-comfficeffice" /><o></o>
></o>
Use the spreadsheet I provided above to check these numbers. This is the biggest reason I hate leases. The dealers have so many variables to play around with. If the dealer had just left MSRP alone, and not required the extra down payment, his deal would have been a good one, but he got greedy, and the buyer paid for it. Repetitious Moral of the story: Don't let them redirect your attention to just the monthly payment. <o></o>
Here's one from a reader who emailed me to say how they got scammed on a Toyota Camry lease. Before going in, the buyer researched all the prices and calculated the numbers in the table below. The dealer also calculated the numbers and showed them a lower monthly payment. Good deal right? Wrong! Examine the costs in the table:
<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com
fficeffice" /><o></o><TABLE class=MsoNormalTable style="BACKGROUND: #ccffff; mso-cellspacing: 1.5pt; mso-padding-alt: 3.75pt 3.75pt 3.75pt 3.75pt" cellPadding=0 border=1><TBODY><TR style="mso-yfti-irow: 0; mso-yfti-firstrow: yes"><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR><TR style="mso-yfti-irow: 1"><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent">MSRP<o></o>
</TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR><TR style="mso-yfti-irow: 2"><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent">Best Deal<o></o>
</TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR><TR style="mso-yfti-irow: 3"><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent">Registration Fee<o></o>
</TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR><TR style="mso-yfti-irow: 4"><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent">Gross Capitalized Cost<o></o>
</TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR><TR style="mso-yfti-irow: 5"><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent">Residual (% * MSRP)<o></o>
</TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR><TR style="mso-yfti-irow: 6"><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent">Down Payment<o></o>
</TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR><TR style="mso-yfti-irow: 7"><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent">Adjusted Cap Cost<o></o>
</TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR><TR style="mso-yfti-irow: 8"><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent">Depreciation during lease<o></o>
</TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR><TR style="mso-yfti-irow: 9"><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent">Money Factor<o></o>
</TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR><TR style="mso-yfti-irow: 10"><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent">Monthly Payment (incl. 7% tax)<o></o>
</TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR><TR style="mso-yfti-irow: 11"><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR><TR style="mso-yfti-irow: 12; mso-yfti-lastrow: yes"><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR></TBODY></TABLE>
This is a textbook scam. Notice the items in RED? The salesman played cash flow games on the buyer, overcharging them. The monthly payments were less, so the salesman had the buyer's attention focused on the payments, instead of the big picture. The buyer had no idea the dealer charged him $400 over MSRP! Also, the dealer required $797 more cash down, which somewhat shields the $400 over invoice, Because the $797 reduces the cap cost even further. The buyer's loss is $617 on the Total Cost Of Lease in the table. But with higher cap cost, how are the payments lower? It's simple. They increased cash down to $4297, artificially inflated the residual value so the depreciation would be less, and used a slightly lower money factor to throw off the buyer, leaving our buyer with a $617 loss. Very clever, Mr. Bond. This higher residual is OK if he won't buy the car at lease end. But if he does, he'll lose even more money, because now the residual is $14012, and the market value of the car will most likely be $12,400. If the buyer purchases this car at the end of the lease, they will lose a total of $2326 to this scam. <oItem<o></o>
></o>What the
buyer calculated<o></o>
buyer calculated<o
></o>What the
dealer calculated<o></o>
dealer calculated<o
></o>></o></TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent">
$22600<o></o>
></o>$22600<o></o>
></o>></o></TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent">
$20800<o></o>
></o>$23000
($400 over MSRP!)<o></o>
($400 over MSRP!)<o
></o>></o></TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent">
$500<o></o>
></o>$500<o></o>
></o>></o></TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent">
$21300<o></o>
></o>$23500<o></o>
></o>></o></TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent">
$12430 (55%)<o></o>
></o>$14012 (62%)<o></o>
></o>></o></TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent">
$3500<o></o>
></o>$4297<o></o>
></o>></o></TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent">
$17800<o></o>
></o>$19203<o></o>
></o>></o></TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent">
$5370<o></o>
></o>$5191<o></o>
></o>></o></TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent">
.00316 (7.58%)<o></o>
></o>.002844 (6.82%)<o></o>
></o>></o></TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 3.75pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 3.75pt; PADDING-BOTTOM: 3.75pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 3.75pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent">
$262<o></o>
></o>$257<o></o>
></o>Total Cost Of Lease
(cash down + payments)<o></o>
(cash down + payments)<o
></o>$12932<o></o>
></o>$13549<o></o>
></o>Total Lease
(if car is bought at end)<o></o>
(if car is bought at end)<o
></o>$25272<o></o>
></o>$27598<o></o>
></o>></o>Use the spreadsheet I provided above to check these numbers. This is the biggest reason I hate leases. The dealers have so many variables to play around with. If the dealer had just left MSRP alone, and not required the extra down payment, his deal would have been a good one, but he got greedy, and the buyer paid for it. Repetitious Moral of the story: Don't let them redirect your attention to just the monthly payment. <o
></o>Common Dealer Lease Scams<?xml:namespace prefix = o ns = "urn:schemas-microsoft-comfficeffice" /><o></o>
Total of monthly payments is...
Almost every leasing ad has a phrase that says "Total of Monthly Payments is..." or "Total Payments=", etc. They are relying on your brain to pull the Jedi mind trick for them. They know your brain will tell you that "amount of payments" is the total amount the lease will cost you, but in reality, it's thousands more! In a BMW example later in this section, you'll see the ad says "Total of Monthly payments $22,200." So your brain tricks you into thinking the lease is only costing you $22,200. But this is wrong because the ad also says you have to pay $6490 in cash down and fees, plus the monthly payments quoted don't include tax, so that adds even more. By time you are done with the correct calculations, the true total cost of the lease is over $29000, a full $7000 more than the ad implies. How do they get way with this? They didn't lie, they simply said the total of monthly payments = $22,200. That's the truth. But they know that your brain will focus on the word "Total", and tell the rest of your body that the lease will only cost you $22,200, and your hormones go wild, you start foaming at the mouth because you think you are getting a good deal, and in the intoxication of euphoria, you sign the contract. Most people never even find out they were wrong, nor do they know how to properly calculate how much a lease is really costing them.<o></o>
Always shop your leases around
Just because they write it up does not mean you have to sign. Dealers are arrogant these days and chances are they did not budge from MSRP. Ask them to give you a copy to study overnight. They may not, they don't want you shopping around. If they don't give you a copy, write down what you can, then go to the next dealer. Never sign a lease the first time they write it up unless your are absolutely sure you got the price that you want based on the knowledge I have given you here. If you still are unsure, then shop around. Tell them to save the paperwork and you'll be back. Of course they will do everything in their power to prevent you from leaving. It's a good thing you got your drivers license back, right? Believe me, they'll hold on to the paperwork if you tell them to. The deal will still be there tomorrow if they did not sell the car. If they feed you some BS about "this deal is only good today" Tell them "So is my offer", then run, don't walk out of that devilship. Oooops! I meant to say dealership.<o></o>
Lease a car that traditionally holds its value. Payments will be lower on a car with higher residual value (example BMW, Lexus) when the lease is up. This is because depreciation is less. Check out the automotive lease sites, and books for the residual values of leased cars. Don't get ripped off here, folks, make sure the dealer's residual value is equal to or greater than your sources, otherwise they are ripping you off. Also, look beyond the monthly payment at all the other fees. <o></o>
Always do a sanity check on the money factor, converting it to equivalent APR. If they feed you some BS line about it being too complicated, remind them the law requires them to tell you in writing what the money factor is. To get APR, multiply the money factor by 2400. Here's some ranges of money factor/interest:
<o></o>
></o>
Let me repeat this point: Only lease a car with a proven track record of maintaining residual value. Know the residual of any car you plan to lease before you go shopping. Check out the Automotive Leasing Guides, and sites for the latest residual figures on your vehicle. Remember, the higher the residual value, the lower the depreciation, and the lower your monthly payments! <o></o>
Never let your guard down for a minute. It's easy to do in a "No Pressure" type dealer. They act like they are being the most honest, up front people in the world. If they are trying to make you think they're honest, don't fall for it. They are probably getting you with a money factor equal to 18% interest, or they are hiding the fact that they are charging full MSRP. <o></o>
Negotiate the price of the car as if you were buying it. During negotiations, if you switch from buying a car to leasing it, the dealer should still base your lease payments on the same price you negotiated for the purchase. However, in most cases, when you switch from buying to leasing, the dealer may figure your lease payment on the full "sticker price" not the lower price originally offered when you were going to buy the car. Therefore, make sure the price (capitalized cost) you negotiated is shown on the lease, and is the same as the price you negotiated if you first discussed buying the car. <o></o>
If you trade in a vehicle verify the trade-in credit is subtracted from the capitalized cost of the car. The trade-in credit, and factory rebates or discounts should be subtracted from the price of the car you are leasing. Be careful here, they can get away without showing these numbers here, so watch closely. Any dealer that refuses to show you this or claims they don't have to because the law does not require it is just a class A loser. You should immediately get out of there, and email everyone you know so they will never lose any money to this dealer also. Federal law requires them to itemize the trade-in. <o></o>
Just as in buying the car, don't take any of the extras like rust proofing on a brand-new car you only plan to drive for 3 years. Believe me, your car won't rust in three years. Definitely DO NOT buy the extended warranty, since you will only have the car 2-3 years! Remember you don't own the car, and you already have the benefit of the factory warranty that comes with the car. Don't pay for extras that you won't use. Remember, you can't use an extended warranty during the regular warranty period, no matter what anyone tells you. <o></o>
Negotiate everything. Have a current car residual value book with you to lookup the prices and negotiate as high of a residual value as you can get. Also, don't for get to negotiate out the security deposit, bank fees, dealer service fees, etc. It's unlikely they'll drop the security deposit, though. These fees are just icing on the cake for them that would be better served in your pocket. Even the money factor should be negotiable. If you want to pay 8% interest, ask for a money factor of 8/2400=.00333. You can tell if they are trying to charge you 18% interest because the money factor would be 18/2400=.0075. A 2.9% interest rate would have a money factor of 2.9/2400=.0012. Now you can see the range of money factors from low to high. You should watch this number like a hawk and check all their math. Bring a calculator that does lease payments, and always have a money factor/interest rate conversion table handy. the problem is many dealers don't tell you what the money factor is, they lie about it, and you believe them because you don't know how to verify the numbers. Tell them to PUT THE MONEY FACTOR IN WRITING. <o></o>
Don't let the dealer try to tell you the depreciation is calculated by subtracting residual value from MSRP. This gives them an excuse to put MSRP on your leasing papers, which you do not want. You will end up like Homer Simpson if you listen to the dealer. <o></o>
Depreciation is calculated by subtracting residual value from the adjusted capitalized cost, which hopefully is lower than MSRP if you negotiated properly. Don't end up like Homer Simpson (Dooooooh!) If they base it on MSRP, you are paying more depreciation and thus higher monthly payments, which means more profit for them and less money in your pockets. Also, avoid as many extras as possible, as these increase your depreciation (by increasing cap cost).<o></o>
Scenario #4: During the lease, you total the car in a wreck, or it gets stolen.
You'll have to wait for the insurance company to pay the claim. Your payments must be current to the date of the loss, and you must have paid all 'other' charges such as parking tickets, delinquent taxes, etc. You'll have to make the deductible payment to the leasing company if the market value of the vehicle were less than the balance. If there was still a difference, the loss would be written off, meaning the gap insurance would cover the rest. Once the insurance company pays the claim to the leasing company, the account should be closed and you can go get another car. Push the insurance company to get the claim settled ASAP before the vehicle is recovered. Insurance companies are very slow about paying claims like this. <o></o>
Moral Of The Story: If you lease a car, make sure you buy gap insurance, but don't buy it from the dealer unless you like paying double. Buy it from your regular insurance agent. Most leasing companies require you to take out huge amounts liability insurance. Make sure you do not cut corners there. Find out ahead of time what you are covered for, and how your lessor handles totaled or stolen vehicles. <o></o>
fficeffice" /><o></o>Total of monthly payments is...
Almost every leasing ad has a phrase that says "Total of Monthly Payments is..." or "Total Payments=", etc. They are relying on your brain to pull the Jedi mind trick for them. They know your brain will tell you that "amount of payments" is the total amount the lease will cost you, but in reality, it's thousands more! In a BMW example later in this section, you'll see the ad says "Total of Monthly payments $22,200." So your brain tricks you into thinking the lease is only costing you $22,200. But this is wrong because the ad also says you have to pay $6490 in cash down and fees, plus the monthly payments quoted don't include tax, so that adds even more. By time you are done with the correct calculations, the true total cost of the lease is over $29000, a full $7000 more than the ad implies. How do they get way with this? They didn't lie, they simply said the total of monthly payments = $22,200. That's the truth. But they know that your brain will focus on the word "Total", and tell the rest of your body that the lease will only cost you $22,200, and your hormones go wild, you start foaming at the mouth because you think you are getting a good deal, and in the intoxication of euphoria, you sign the contract. Most people never even find out they were wrong, nor do they know how to properly calculate how much a lease is really costing them.<o
></o>Always shop your leases around
Just because they write it up does not mean you have to sign. Dealers are arrogant these days and chances are they did not budge from MSRP. Ask them to give you a copy to study overnight. They may not, they don't want you shopping around. If they don't give you a copy, write down what you can, then go to the next dealer. Never sign a lease the first time they write it up unless your are absolutely sure you got the price that you want based on the knowledge I have given you here. If you still are unsure, then shop around. Tell them to save the paperwork and you'll be back. Of course they will do everything in their power to prevent you from leaving. It's a good thing you got your drivers license back, right? Believe me, they'll hold on to the paperwork if you tell them to. The deal will still be there tomorrow if they did not sell the car. If they feed you some BS about "this deal is only good today" Tell them "So is my offer", then run, don't walk out of that devilship. Oooops! I meant to say dealership.<o
></o>Lease a car that traditionally holds its value. Payments will be lower on a car with higher residual value (example BMW, Lexus) when the lease is up. This is because depreciation is less. Check out the automotive lease sites, and books for the residual values of leased cars. Don't get ripped off here, folks, make sure the dealer's residual value is equal to or greater than your sources, otherwise they are ripping you off. Also, look beyond the monthly payment at all the other fees. <o
></o>Always do a sanity check on the money factor, converting it to equivalent APR. If they feed you some BS line about it being too complicated, remind them the law requires them to tell you in writing what the money factor is. To get APR, multiply the money factor by 2400. Here's some ranges of money factor/interest:
<o
></o><TABLE class=MsoNormalTable style="BORDER-RIGHT: 4.5pt outset; BORDER-TOP: 4.5pt outset; BACKGROUND: #ccffff; BORDER-LEFT: 4.5pt outset; BORDER-BOTTOM: 4.5pt outset; mso-cellspacing: 1.5pt; mso-padding-alt: 2.25pt 2.25pt 2.25pt 2.25pt" cellPadding=0 border=1><TBODY><TR style="mso-yfti-irow: 0; mso-yfti-firstrow: yes"><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 2.25pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 2.25pt; PADDING-BOTTOM: 2.25pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 2.25pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent" colSpan=2></TD></TR><TR style="mso-yfti-irow: 1"><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 2.25pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 2.25pt; PADDING-BOTTOM: 2.25pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 2.25pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent">If the Money Factor is...<o></o>
</TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 2.25pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 2.25pt; PADDING-BOTTOM: 2.25pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 2.25pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent">Then your Interest Rate will be...<o></o>
</TD></TR><TR style="mso-yfti-irow: 2"><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 2.25pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 2.25pt; PADDING-BOTTOM: 2.25pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 2.25pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 2.25pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 2.25pt; PADDING-BOTTOM: 2.25pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 2.25pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR><TR style="mso-yfti-irow: 3"><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 2.25pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 2.25pt; PADDING-BOTTOM: 2.25pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 2.25pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 2.25pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 2.25pt; PADDING-BOTTOM: 2.25pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 2.25pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR><TR style="mso-yfti-irow: 4"><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 2.25pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 2.25pt; PADDING-BOTTOM: 2.25pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 2.25pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 2.25pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 2.25pt; PADDING-BOTTOM: 2.25pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 2.25pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR><TR style="mso-yfti-irow: 5"><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 2.25pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 2.25pt; PADDING-BOTTOM: 2.25pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 2.25pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 2.25pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 2.25pt; PADDING-BOTTOM: 2.25pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 2.25pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR><TR style="mso-yfti-irow: 6; mso-yfti-lastrow: yes"><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 2.25pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 2.25pt; PADDING-BOTTOM: 2.25pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 2.25pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 2.25pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 2.25pt; PADDING-BOTTOM: 2.25pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 2.25pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent"></TD></TR></TBODY></TABLE>
A huge red flag should go up if your money factor is .0075. This means the dealer is charging you 18% interest. So unless you have bad credit, the money factor should be .00333 or below. This is why they don't quote leases with interest rates. How would you know by looking at ".0075" that you were being taken for a ride, straight to the cleaners? <oInterest Rate = (Money Factor) * 2400<o></o>
></o>></o></TD><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 2.25pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 2.25pt; PADDING-BOTTOM: 2.25pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 2.25pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent">Then your Interest Rate will be...<o
></o></TD></TR><TR style="mso-yfti-irow: 2"><TD style="BORDER-RIGHT: #e0dfe3; PADDING-RIGHT: 2.25pt; BORDER-TOP: #e0dfe3; PADDING-LEFT: 2.25pt; PADDING-BOTTOM: 2.25pt; BORDER-LEFT: #e0dfe3; PADDING-TOP: 2.25pt; BORDER-BOTTOM: #e0dfe3; BACKGROUND-COLOR: transparent">
.00121<o></o>
></o>2.9%<o></o>
></o>.00333<o></o>
></o>8%<o></o>
></o>.00417<o></o>
></o>10%<o></o>
></o>.00500<o></o>
></o>12%<o></o>
></o>.00750<o></o>
></o>18%<o></o>
></o>></o>Let me repeat this point: Only lease a car with a proven track record of maintaining residual value. Know the residual of any car you plan to lease before you go shopping. Check out the Automotive Leasing Guides, and sites for the latest residual figures on your vehicle. Remember, the higher the residual value, the lower the depreciation, and the lower your monthly payments! <o
></o>Never let your guard down for a minute. It's easy to do in a "No Pressure" type dealer. They act like they are being the most honest, up front people in the world. If they are trying to make you think they're honest, don't fall for it. They are probably getting you with a money factor equal to 18% interest, or they are hiding the fact that they are charging full MSRP. <o
></o>Negotiate the price of the car as if you were buying it. During negotiations, if you switch from buying a car to leasing it, the dealer should still base your lease payments on the same price you negotiated for the purchase. However, in most cases, when you switch from buying to leasing, the dealer may figure your lease payment on the full "sticker price" not the lower price originally offered when you were going to buy the car. Therefore, make sure the price (capitalized cost) you negotiated is shown on the lease, and is the same as the price you negotiated if you first discussed buying the car. <o
></o>If you trade in a vehicle verify the trade-in credit is subtracted from the capitalized cost of the car. The trade-in credit, and factory rebates or discounts should be subtracted from the price of the car you are leasing. Be careful here, they can get away without showing these numbers here, so watch closely. Any dealer that refuses to show you this or claims they don't have to because the law does not require it is just a class A loser. You should immediately get out of there, and email everyone you know so they will never lose any money to this dealer also. Federal law requires them to itemize the trade-in. <o
></o>Just as in buying the car, don't take any of the extras like rust proofing on a brand-new car you only plan to drive for 3 years. Believe me, your car won't rust in three years. Definitely DO NOT buy the extended warranty, since you will only have the car 2-3 years! Remember you don't own the car, and you already have the benefit of the factory warranty that comes with the car. Don't pay for extras that you won't use. Remember, you can't use an extended warranty during the regular warranty period, no matter what anyone tells you. <o
></o>Negotiate everything. Have a current car residual value book with you to lookup the prices and negotiate as high of a residual value as you can get. Also, don't for get to negotiate out the security deposit, bank fees, dealer service fees, etc. It's unlikely they'll drop the security deposit, though. These fees are just icing on the cake for them that would be better served in your pocket. Even the money factor should be negotiable. If you want to pay 8% interest, ask for a money factor of 8/2400=.00333. You can tell if they are trying to charge you 18% interest because the money factor would be 18/2400=.0075. A 2.9% interest rate would have a money factor of 2.9/2400=.0012. Now you can see the range of money factors from low to high. You should watch this number like a hawk and check all their math. Bring a calculator that does lease payments, and always have a money factor/interest rate conversion table handy. the problem is many dealers don't tell you what the money factor is, they lie about it, and you believe them because you don't know how to verify the numbers. Tell them to PUT THE MONEY FACTOR IN WRITING. <o
></o>Don't let the dealer try to tell you the depreciation is calculated by subtracting residual value from MSRP. This gives them an excuse to put MSRP on your leasing papers, which you do not want. You will end up like Homer Simpson if you listen to the dealer. <o
></o>Depreciation is calculated by subtracting residual value from the adjusted capitalized cost, which hopefully is lower than MSRP if you negotiated properly. Don't end up like Homer Simpson (Dooooooh!) If they base it on MSRP, you are paying more depreciation and thus higher monthly payments, which means more profit for them and less money in your pockets. Also, avoid as many extras as possible, as these increase your depreciation (by increasing cap cost).<o
></o>Scenario #4: During the lease, you total the car in a wreck, or it gets stolen.
You'll have to wait for the insurance company to pay the claim. Your payments must be current to the date of the loss, and you must have paid all 'other' charges such as parking tickets, delinquent taxes, etc. You'll have to make the deductible payment to the leasing company if the market value of the vehicle were less than the balance. If there was still a difference, the loss would be written off, meaning the gap insurance would cover the rest. Once the insurance company pays the claim to the leasing company, the account should be closed and you can go get another car. Push the insurance company to get the claim settled ASAP before the vehicle is recovered. Insurance companies are very slow about paying claims like this. <o
></o>Moral Of The Story: If you lease a car, make sure you buy gap insurance, but don't buy it from the dealer unless you like paying double. Buy it from your regular insurance agent. Most leasing companies require you to take out huge amounts liability insurance. Make sure you do not cut corners there. Find out ahead of time what you are covered for, and how your lessor handles totaled or stolen vehicles. <o
></o>
Actually, I am not in the auto industry. I did my research before I leased my wife's vehicle two years ago. We ended up getting a 2005 Nissan Pathfinder for $379.80 per month, with no money down, no acquistion fee and no security deposit.
I visited 4 dealerships, but I finally found one that wanted to work with me. One thing that all the dealerships have in common is that they lie.
I refuse to get taken. The information is out to there, all you have to do is read up and learn it.
Good luck!
I visited 4 dealerships, but I finally found one that wanted to work with me. One thing that all the dealerships have in common is that they lie.
I refuse to get taken. The information is out to there, all you have to do is read up and learn it.
Good luck!
Unfortunaely the public isn't used to haggling any more and it costs those that do like to haggle their bargaining advantage. No one is old school any more and don't even know what a bargain would look like. All they seem to want to know is how much are my monthly payments!
It seems there is really not much of a difference whether buying or leasing. If you buy it you may have equity at the end, but now you have to sell the car or trade it in, and the car is worth only half of what you paid for it. You also have tied up your money...if you paid cash....where it could have been invested insomething making you money.
The only person who really can't lease is either someone that wants to keep their car a long time, or a person like me who puts on very high mileage every year!
It seems there is really not much of a difference whether buying or leasing. If you buy it you may have equity at the end, but now you have to sell the car or trade it in, and the car is worth only half of what you paid for it. You also have tied up your money...if you paid cash....where it could have been invested insomething making you money.
The only person who really can't lease is either someone that wants to keep their car a long time, or a person like me who puts on very high mileage every year!
Too much b/s on this topic. First off you should not refer to that as a lease its a Fleece out and out. Any way you add up the math you end up paying too much for the car. And i mean any which way you add it up.
I am saving up to buy a mercedes, i have more than enough for a lease but i will not waste my hard earned money to lease one. I have looked at the numbers and it is just stupid as hell to lease. I will save up my 50k-60k and buy a barely used one..(under 10k miles)...But no way in hell will i ever lease a car or buy a brand new one.)
Dont ever ever lease a car, man..that is just stupid.
I am saving up to buy a mercedes, i have more than enough for a lease but i will not waste my hard earned money to lease one. I have looked at the numbers and it is just stupid as hell to lease. I will save up my 50k-60k and buy a barely used one..(under 10k miles)...But no way in hell will i ever lease a car or buy a brand new one.)
Dont ever ever lease a car, man..that is just stupid.
