More often than not, car leasing gets a less than good reputation. It really is no wonder though. Many dealers have become well known as giving crappy deals to customers who are a bit confused about leasing and simply wish to have a nicer vehicle with low payments. Nearly 20% of new vehicle transactions are done through leasing. Even with the bad rep leasers get, I personally think that more people should be leasing their vehicles instead of purchasing them outright. There are many people who will disagree with me, but just hear me out. Keep reading to see some myths about cars.
Myth Number 1: Purchasing a Vehicle is Less Costly Then Leasing One
The truth is that if you hold on to your vehicle until the time that the loan is paid off then you do save money through buying outright. However, if you trade your vehicle in before it is paid off than you will never make up the loan’s balance. Say that after three years you want a different car. In order to match the value that is written in the lease you will likely have to sell your car yourself as you will not be able to trade it in.
Myth Number 2: It is Not Possible to Get a Good Buy With Negotiation
This is simply not the truth. All car leases are negotiable. In order to get the bargains you have to know the car leasing jargon. First is capitalized cost. This is the price of the vehicle. You can and should be ready to haggle over the cost just as you would if you were purchasing a vehicle. The leasing company actually expects it even if they are not willing to budge an inch. Most of the time though they will meet you halfway on your expectations for monthly payments. The next term is residual value which is the vehicles value when the lease is up. When this value is inflated it will likely lower your payments but is can also be a bad thing. Keep this in mind.
Myth Number 3: When you turn in the leased vehicle, you may have to pay outrageous fees
The usual allotment per year on the mileage is about 11,000 miles. However, for every mile you go over the allowed number, the only fees you will have to pay is about 20 cents per mile. However, if you purchase a vehicle, when you are ready to trade it in you will still be penalized if the mileage is excessive.
Myth Number 4: If you want to get out of your lease before the time is up, you are out of luck
Again, this is simply not true. There are two ways to go about this. You can either go to the leasing company, tell them you want out and write a check to cover the early termination of the lease. You can also transfer the lease to someone else as long as they are approved by the leasing company.
Instead of listening to the myths, do your own research so you can get the proper information and see if car leasing is the right option for you.
Peter Jameson is an expert when it comes to car leasing (interesting to know is that the Danish term is Billeasing) and he really enjoys sharing his useful tips online. Currently he works in the finance department of Toyota Denmark.