Monday, May 14, 2012

Car Leasing 101: What You Need To Know

Who can resist the ads? Lease the car of your dreams for a mere 9.00 and very little down. It doesn't take much to see why leasing has become a popular option for those who either can't afford to buy a new car, or can't afford to upgrade to the model they really want.

On the surface, leasing a car may seem too good to be true - and oftentimes it is. Sure, leasing often gets you in a better car, but is it a better deal? For most people, the answer is no. Unless you need a short-term arrangement due to work or school demands, leasing often costs much more in the long run than buying.

What are some of the disadvantages of leasing? Check these out and see:

-If you continue to rollover car leases, payments never end, because you never "own" the vehicle.

-Limited Mileage. Leases offer a limited amount of miles per year that the car can be drive. Go over those limits, and pay extra when the lease ends

-The vehicle must be kept in tip-top shape. Scheduled maintenance must be done on time. You'll also pay for any scratches, dents, spots, stains, and general wearing on both the interior and exterior of the vehicle at the end of the least

-There's no backing out. Once a lease agreement is signed, you're in it until the end. If something happens, and you find yourself in need of getting out of a lease before it expires, plan on paying hefty terminations fees and penalties immediately

-Depreciation Hurts. All cars begin to lose value as soon as they are driven off the lot, but leased vehicles seem to be hit harder due to the fact that payments are so low, hindering any chance of having any equity in the vehicle. Without the ability to trade it in at the end of the lease, that may not seem like a bad thing, unless you're in an accident. If the car or truck being leased happens to be totaled in an accident, the insurance company is only liable for the estimated value, not the total lease payoff, leaving you with a potential bill. Of course you can purchase separate leasing insurance, for a price.

-When it ends, you have no car. Most leases today range from 2-5 years. The average is 36 months. That means, in just three short years, you'll be forced to acquire another new vehicle. That may mean paying another down payment, and setting up yet another payment schedule. At least when you buy a car, you have some time to find a replacement.

-You're stuck with what they have. Customizing a vehicle is generally out of the questions when leasing. You are forced to take whatever color and options they have, which may not be necessarily what you want.

Leasing can be a viable option for some consumers; the trick is to understand both its pros and cons before rushing to the showroom to make a deal.

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